Open AccessPosted Content
The causal effect of education on earnings
TLDR
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.read more
Citations
More filters
Heterogeneity in the Returns to Schooling: Implications for Policy Evaluation
TL;DR: Carnei et al. as mentioned in this paper examined the empirical importance of accounting for heterogeneity (and selection) in the estimation of the returns to schooling and in the evaluation of education policy and found that heterogeneity in returns is an empirically relevant phenomenon.
Journal ArticleDOI
College risk and return
TL;DR: In this paper, a heterogeneous agent life-cycle model with endogenous college enrollment and uninsurable risk of college completion was developed to analyze how costs and benefits of college education affect enrollments and dropouts.
Journal ArticleDOI
The democratizing effect of education
Eduardo Alemán,Yeaji Kim +1 more
TL;DR: This article examined the link between education and democracy using an expanded dataset on educational attainment that covers most of the postwar era and found that increases in levels of education improve levels of democracy and that the democratizing effect of education is more intense in poor countries.
Interpreting Sheepskin Effects in the Returns to Education
TL;DR: This article found that degree attainment and years of schooling are negatively correlated with ability among degree-holders, while a negative correlation exists among dropouts because the most able benefit from increased schooling.
Journal ArticleDOI
The impact of training on productivity and wages: Evidence from Belgian firm level panel data
TL;DR: In this article, the effects of on-the-job training on productivity and wages were analyzed using data from more than 13,000 firms and they found that workers receiving training are on average more productive than workers not receiving training.