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The causal effect of education on earnings
TL;DR: This paper surveys the recent literature on the causal relationship between education and earnings and concludes that the average (or average marginal) return to education is not much below the estimate that emerges from a standard human capital earnings function fit by OLS.
Abstract: This paper surveys the recent literature on the causal relationship between education and earnings. I focus on four areas of work: theoretical and econometric advances in modelling the causal effect of education in the presence of heterogeneous returns to schooling; recent studies that use institutional aspects of the education system to form instrumental variables estimates of the return to schooling; recent studies of the earnings and schooling of twins; and recent attempts to explicitly model sources of heterogeneity in the returns to education. Consistent with earlier surveys of the literature, I conclude that the average (or average marginal) return to education is not much below the estimate that emerges from a standard human capital earnings function fit by OLS. Evidence from the latest studies of identical twins suggests a small upward "ability" bias -- on the order of 10%. A consistent finding among studies using instrumental variables based on institutional changes in the education system is that the estimated returns to schooling are 20-40% above the corresponding OLS estimates. Part of the explanation for this finding may be that marginal returns to schooling for certain subgroups -- particularly relatively disadvantaged groups with low education outcomes -- are higher than the average marginal returns to education in the population as a whole.
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TL;DR: In this article, the authors offer an appraisal of the economics of education research area, charting its history as a field and discussing the ways in which economists have contributed both to education research and to education policy-making.
Abstract: In this paper we offer an appraisal of the economics of education research area, charting its history as a field and discussing the ways in which economists have contributed both to education research and to education policy-making. In particular, we highlight the theoretical and methodological contributions that economists have made to the field of education during the last 50 years. Despite the success of the economics of education as a field of inquiry, we argue that some of the contributions made by economists could be limited if the economics of education is seen as quite distinct from the other disciplines working in the field of education. In these areas of common interest, economists need to work side by side with the other major disciplines in the field of education if their contribution to the field is to be maximised, particularly in terms of applying improved methodology. We conclude that the study of education acquisition and its economic and social impact in the economics of education research area is very likely to remain a fertile research ground. Acknowledgements
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TL;DR: In this paper, the authors explored how patterns of institutional differentiation in higher education systems are linked to educational inequalities at the transition from higher education to work in five post-socialist Central and Eastern European countries studied here.
Abstract: This study explores how patterns of institutional differentiation in higher education systems are linked to educational inequalities at the transition from higher education to work. We measure institutional differentiation within countries along two dimensions: degree level that mainly structures educational inequalities in occupational status attainment, and occupational specificity that mainly structures educational inequalities in labour market entry dynamics. We argue that convergence processes have lead to similar patterns of institutional differentiation in higher education across the five post-socialist Central- and Eastern European countries studied here. Educational inequalities at the transition from higher education to work should, therefore, also follow similar patterns across countries. Our empirical results show that degree level is a central determinant of occupational status in respondents’ first job, with university master graduates reaching the highest occupational positions, followed by university bachelor and vocational college graduates. In terms of labour market entry dynamics, the slowest transitions into first employment are observed among graduates from least occupation-specific programmes, but overall the relationship between occupational specificity and labour market entry dynamics is more complex. Altogether, we find considerable similarities across countries in patterns of institutional differentiation and educational inequalities at the transition from higher education to work.
42 citations
TL;DR: Analysis of longitudinal data from the Fragile Families and Child Well-Being Study suggests that child support arrears result in declines in average weeks worked in the formal labor market in subsequent time periods, and that arreARS obligations that are low relative to income result in increases in the probability that fathers engage in any formal work.
Abstract: This study examines how child support arrears affect fathers’ labor force participation. It relies on longitudinal data from the Fragile Families and Child Well-Being Study. Findings from analyses of these data suggest that child support arrears result in declines in average weeks worked in the formal labor market in subsequent time periods. These findings are driven by the behaviors of fathers who had relatively high amounts of arrears and no income in the previous year and are mostly robust to tests for selection into no work or low levels of work by fathers. Findings also suggest that arrears obligations that are low relative to income result in increases in the probability that fathers engage in any formal work. Arrears are not statistically significantly related to informal labor force participation. This study highlights both intended and unintended consequences of the growth in arrears under current child support enforcement policies.
42 citations
TL;DR: In this article, detailed data on individual applicants to a large public university were used to demonstrate that net price responsiveness decreases with need and ability, and showed a movement towards a high tuition/high aid (low tuition/low aid) policy significantly lowers (raises) tuition revenue with a modest increase (decrease) in the number of aid-eligible students.
Abstract: Detailed data on individual applicants to a large public university are used to demonstrate that net price responsiveness decreases with need and ability. Enrollment effects are simulated and show a movement towards a high tuition/high aid (low tuition/low aid) policy significantly lowers (raises) tuition revenue with a modest increase (decrease) in the number of aid-eligible students.
41 citations
TL;DR: It is found that the one year increase in compulsory school-age reduces dropout by 2.5 percentage points, but the effect is entirely situated in the group non-liable to the policy reform, which may reflect anticipation of labor market opportunities.
41 citations