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: In this paper, the authors argue that without a proper educational system no country will prosper, nor will its inhabitants, and that people should continue learning over their entire lifespans lest they or their society suffer the dire consequences.
Abstract: It is a generally accepted truth that without a proper educational system no country will prosper, nor will its inhabitants. With the arrival of the post-industrial society, in Europe and elsewhere, it has become increasingly clear that people should continue learning over their entire lifespans lest they or their society suffer the dire consequences. But what does this future lifelong learning society exactly look like? And how then should education prepare for it? What should people learn and how should they do so? How can we afford to pay for all this, what are the socio-economic constraints of the move towards a lifelong-learning society? And, of course, what role can and should the educational establishment of schools and universities play? This are questions that demand serious research efforts, which is what this paper argues for.

32 citations

Journal ArticleDOI
TL;DR: In this article, the authors investigated the economic outcomes of education for wage earners in Pakistan by analysing the relationship between schooling, cognitive skills and ability on the one hand, and economic activity, occupation, sectoral choice and earnings, on the other.
Abstract: This study investigates the economic outcomes of education for wage earners in Pakistan. This is done by analysing the relationship between schooling, cognitive skills and ability on the one hand, and economic activity, occupation, sectoral choice and earnings, on the other. In Pakistan, an important question remains largely unaddressed: what does the coefficient on ‘schooling’ in conventional earnings function estimates measure? While human capital theory holds that the economic return to an extra year of schooling measures productivity gains acquired through additional schooling, the credentialist view argues that it represents a return to acquired qualifications and credentials while a third, the signalling hypothesis, suggests that is captures a return to native ability. This paper seeks to adjudicate between these theories using data from a unique purpose-designed survey of more than 1000 households in Pakistan, collected in 2007. The paper also examines the shape of the education-earnings relationship in Pakistan as a way of testing the poverty reducing potential of education in Pakistan.

32 citations

Journal ArticleDOI
TL;DR: In this paper, the authors investigated the long-term trend over half a century in the proportion of people living alone, separately for different age and gender groups, focusing on two groups, the widowed elderly aged 65 or over and never-married 25 to 34-year olds.
Abstract: Background: One of the major demographic changes in Korea is the rapid increase of one-person households, from 7% in 1985 to 24% in 2010. The increase of living alone has important implications for the traditional family system. Objective: We investigate the long-term trend over half a century in the proportion of people living alone, separately for different age and gender groups. Focusing on two groups, the widowed elderly aged 65 or over and never-married 25 to 34-year-olds, we further examine the relationship between education and living alone. Methods: We use 1960 to 2010 Korean Census data to describe the trends in living alone by age and gender. We apply logit models to predict the odds of living alone by education from 1980 to 2010. To facilitate interpretation, we present predicted probabilities of living alone. Results: There is a continuing increase in solo living among Koreans, albeit to different degrees, for both genders and all age groups. The rising trend in solo living among elderly widows and never-married men aged 25 to 34, in particular, reveals that the propensity for living alone has increased within specific marital status and age groups. We find that those with lower education were more likely to live alone than their counterparts with higher education. Conclusions: The negative relationship between education and living alone in Korea is in contrast to the pattern of ‘buying-out’ living alone in the United States. We interpret the finding in the context of Korean society, which has a long tradition of valuing living together.

32 citations

Journal ArticleDOI
T. Paul Schultz1
TL;DR: The difficulty of evaluating health program effects reinforces the need to design randomized regional treatments, in order to be able to evaluate without bias the consequences of critical health interventions, such as are needed today to deal with the HIV/AIDS epidemic.

32 citations

Journal Article
TL;DR: The 47th annual conference on education in the 21st century as mentioned in this paper was held at the Federal Reserve Bank of Boston to discuss the challenges of a changing world and the challenges faced by the educational system.
Abstract: During the twentieth century, the United States was a world leader in raising the educational attainment of its population. This important achievement contributed to national productivity growth and extended economic opportunity to formerly disadvantaged groups in society. Now, at the beginning of the twenty-first century, U.S. institutions of higher learning retain an excellent reputation for quality. Less confidence exists, however, in the educational system's ability to meet broad economic and social objectives adequately. This uncertainty stems in part from the shifting global economy and the evolving nature of employment. These doubts also reflect the legacy of widening income inequality over the past quarter century. These concerns have sparked both federal and state legislation to reform elementary and secondary schooling. ; In June 2002, the Federal Reserve Bank of Boston held its 47th annual conference, titled "Education in the 21st Century: Meeting the Challenges of a Changing World." This conference brought together educators, researchers, economists, policymakers, and individuals from the private sector to analyze current institutional and financial arrangements in the area of education. In this article, conference organizer Yolanda Kodrzycki provides an overview of the conference's themes and areas of consensus, as well as a synopsis of each of the formal presentations.

32 citations