scispace - formally typeset
Search or ask a question
Posted Content

The causal effect of education on earnings

01 Jan 1999-Handbook of Labor Economics (Elsevier)-pp 1801-1863
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.
Citations
More filters
Journal ArticleDOI
TL;DR: The authors empirically disentangled the two effects by using Chinese twins data and found that both crossproductivity and assortative mating are important in explaining the current earnings, although the mating effect exists for both husbands and wives, the cross-productivity effect mainly runs from Chinese husbands to wives.
Abstract: Spousal education is correlated with earnings for two reasons: cross‐productivity between couples and assortative mating. This article empirically disentangles the two effects by using Chinese twins data. We have two innovations: using twins data to control for the unobserved mating effect in our estimations and estimating both current and wedding‐time earnings equations. We find that both crossproductivity and mating are important in explaining the current earnings. Although the mating effect exists for both husbands and wives, the cross‐productivity effect mainly runs from Chinese husbands to wives. Our findings shed light on the theories of human capital, marriage, and the family.

40 citations

BookDOI
TL;DR: The authors found that children of mothers with some education spend 75 minutes more on educational activities at home compared with children whose mothers report no education at all, and test scores for children with mothers having some education are higher in English, Urdu (the vernacular), and mathematics by 0.24-0.35 standard deviations.
Abstract: Female education levels are very low in many developing countries. Does maternal education have a causal impact on children's educational outcomes even at these very low levels of education? By combining a nationwide census of schools in Pakistan with household data, the authors use the availability of girls' schools in the mother's birth village as an instrument for maternal schooling to address this issue. Since public schools in Pakistan are segregated by gender, the instrument affects only maternal education rather than the education levels of both mothers and fathers. The analysis finds that children of mothers with some education spend 75 minutes more on educational activities at home compared with children whose mothers report no education at all. Mothers with some education also spend more time helping their children with school work; the effect is stronger (an extra 40 minutes per day) in families where the mother is likely the primary care-giver. Finally, test scores for children whose mothers have some education are higher in English, Urdu (the vernacular), and mathematics by 0.24-0.35 standard deviations. There is no relationship between maternal education and mother’s time spent on paid work or housework - a posited channel through which education affects bargaining power within the household. And there is no relationship between maternal education and the mother's role in educational decisions or in the provision of other child-specific goods, such as expenditures on pocket money, uniforms, and tuition. The data therefore suggest that at these very low levels of education, maternal education does not substantially affect a mother's bargaining power within the household. Instead, maternal education could directly increase the mother's productivity or affect her preferences toward children’s education in a context where her bargaining power is low.

40 citations

Journal ArticleDOI
TL;DR: This paper showed that individual incomes, the distribution of income, and economic growth rates are all closely related to the cognitive skills of the population, and pointed out the central importance of improving teacher quality in any reform strategies.
Abstract: Concentration on school attainment goals without close attention to school quality has hurt developing countries. Recent evidence shows that individual incomes, the distribution of income, and economic growth rates are all closely related to the cognitive skills of the population. While direct evidence from developing countries is thin, the evidence from developed countries points to the central importance of improving teacher quality in any reform strategies.

40 citations

01 Jan 2012
TL;DR: In this paper, the returns to cognitive and socio-emotional (non-cognitive) skills in a developing country setting using a recent labor force survey of the working-age (14-50) urban population in Peru designed to measure cognitive skills (Peabody Picture Vocabulary, verbal fluency, working memory, and numeracy/problem-solving) and personality traits to proxy for socioemotional skills (Big-five factors; Grit - Duckworth et al 2009).
Abstract: This paper estimates the returns to cognitive and socio-emotional (“non-cognitive”) skills in a developing country setting using a recent labor force survey of the working-age (14-50) urban population in Peru designed to measure cognitive skills (Peabody Picture Vocabulary, verbal fluency, working memory, and numeracy/problem-solving) and personality traits to proxy for socio-emotional skills (Big-five Factors; Grit - Duckworth et al 2009), and also collects data on some instrumental variables as skills are measured contemporaneously to schooling and earnings. We corroborate findings from developed countries that both types of skills are important correlates of earnings. After correcting for the potential endogeneity of measured skills vis-a-vis schooling, the findings confirm that both socio-emotional and cognitive skills are equally valued in the Peruvian labor market. A one standard deviation change in an overall cognitive skill measure and in the perseverance facet of Grit each generates a 9% increase on average earnings, conditional on schooling. The effect size of an increase in years of schooling (about 3 years) is a 15% increase in earnings, conditional on skills. The returns to other socio-emotional skills vary across dimensions of personality: 5% higher earnings for emotional stability while 8% lower earnings for agreeableness.

40 citations