Posted Content•
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.
Citations
More filters
25 Sep 2009
TL;DR: Li et al. as mentioned in this paper found that the greatest increase in entrepreneurship after the 1999 constitutional amendment (which made illegal prior discriminatory policies preventing the growth of entrepreneurial firms) was among the top quartiles of the ability distribution.
Abstract: This paper argues that, contrary to conventional thought, the market development of the institutional environment not only lowers constraints to entrepreneurship, but in addition, encourages those of higher ability to choose entrepreneurship through an increase in expected returns. The data exploits a natural experiment to explore the transition to entrepreneurship using a differences-in-differences approach (over time and across regions). The results provide evidence that the greatest increase in entrepreneurship after the 1999 constitutional amendment (which made illegal prior discriminatory policies preventing the growth of entrepreneurial firms) was among the top quartiles of the ability distribution. The findings suggest that the selection of high quality individuals into entrepreneurship is shaped less by the relaxation of constraints such as the costs of entry and more by the risk/return profile of founding a firm. In addition, both developing and developed countries may want to consider institutions that encourage high human capital individuals to enter entrepreneurship since their firms are found to have higher productivity and to be more innovative. This paper analyzes unique data from a recently conducted survey of alumni graduating from 1947–2007 from a technical university in China.
18 citations
TL;DR: Most OECD countries experience high unemployment rates and declining growth in higher educational attainment An often suggested government policy is therefore to allocate resources towards formal education as mentioned in this paper, which is not the case in our case.
Abstract: Most OECD countries experience high unemployment rates and declining growth in higher educational attainment An often suggested government policy is therefore to allocate resources towards formal
18 citations
18 citations
01 Jan 2007
TL;DR: Two groups of six children (aged eleven) in two UK primary schools were trained in research methods and were supported to undertake their own research projects about aspects of literacy, which they identified themselves as mentioned in this paper.
Abstract: Two groups of six children (aged eleven) in two UK primary schools – one in an area of socio-economic advantage and one in an area of socio-economic disadvantage – were trained in research methods. They were supported to undertake their own research projects about aspects of literacy, which they identified themselves. Areas explored include:
- homework experiences
- learning environments and
- how confidence affects literacy.
These research studies provide rich descriptions of children’s own literacy experiences, generating data that is not easily accessible to adults. The absence of power relations in the data collection by having child researchers means that the responses are untainted by efforts to ‘please the adult’. This report will be of interest to teachers, educationalists, government bodies, policy makers
18 citations