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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.
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TL;DR: In this paper, the long run relationship between health behaviors and graduation from a selective college in the 1960s using the Wisconsin Longitudinal Study, which has tracked siblings for over 50 years.
Abstract: The link between education and health is one of the most robust empirical relationships in the social sciences. However, little research has examined the effects of educational quality on health outcomes. We estimate the long run relationship between health behaviors and graduating from a selective college in the 1960s using the Wisconsin Longitudinal Study, which has tracked siblings for over 50 years. Importantly, we control for measures of health endowments, ability, and time preferences before college enrollment as well as shared family and environmental factors. We find large effects of college selectivity on reducing overweight for individuals in their 60s.

27 citations

Journal ArticleDOI
TL;DR: It is found that marriage after childbirth significantly increases a child's early cognitive performance but there is no evidence that it affects child asthma risk or behavioral outcomes.
Abstract: Using a representative sample of children all born to unwed parents drawn from the Fragile Families and Child Wellbeing Study and a potential outcome approach to account for self-selection into marriage, we investigate whether marriage after childbearing has a causal effect on early child development. Comparing children with similar background characteristics and parental mate-selection patterns who differ only in terms of whether their parents marry after childbirth, we find that marriage after childbirth significantly increases a child's early cognitive performance but there is no evidence that it affects child asthma risk or behavioral outcomes.

27 citations

Journal ArticleDOI
TL;DR: This article used the National Child Development Study to investigate the relationship between adult schooling and labour market earnings for men and found that rates of return to human capital are greater for individuals who were educated early in life.
Abstract: This paper uses the National Child Development Study to investigate the relationship between adult schooling and labour market earnings for men. In line with several other studies, the findings suggest that there are returns to all educational qualifications acquired early in life. A variety of statistical models are estimated to try to measure the causal effect of adult education on earnings. Careful analysis reveals that there are no genuine returns to additional qualifications awarded in middle adulthood. The central conclusion of this paper is that rates of return to human capital are greater for individuals who were educated early in life.

27 citations

Posted Content
TL;DR: The authors showed that education affects peoples' decisions to become an entrepreneur negatively, and furthermore that entrepreneurs have higher returns to education than employees (in terms of the comparable performance measure ''income'').
Abstract: How valuable is education for entrepreneurs� performance as compared to employees�? What might explain any differences? And does education affect peoples� occupational choices accordingly? We answer these questions based on a large panel of US labor force participants. We show that education affects peoples� decisions to become an entrepreneur negatively. We show furthermore that entrepreneurs have higher returns to education than employees (in terms of the comparable performance measure �income�). This is the case even when estimating individual fixed effects of the differential returns to education for spells in entrepreneurship versus wage employment, thereby accounting for selectivity into entrepreneurial positions based on fixed individual characteristics. We find these results irrespective of whether we control for general ability and/or whether we use instrumental variables to cope with the endogenous nature of education in income equations. Finally, we find (indirect) support for the argument that the higher returns to education for entrepreneurs is due to fewer (organizational) constraints faced by entrepreneurs when optimizing the profitable employment of their education. Entrepreneurs have more personal control over the profitable employment of their human capital than wage employees. Keywords: entrepreneurship, self-employment, returns to education, performance, personal control, locus of control, human capital, wages, incomes Classification-JEL: J23, J24, J31, J44, M13

27 citations

Journal ArticleDOI
TL;DR: A benefit-cost evaluation of the Accelerated Study in Associate Programs (ASAP) of the City University of New York (CUNY) is reported in this paper, which was designed to accelerate associate degree comp...
Abstract: This article reports a benefit–cost evaluation of the Accelerated Study in Associate Programs (ASAP) of the City University of New York (CUNY). ASAP was designed to accelerate associate degree comp...

26 citations