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
Posted Content
TL;DR: This paper presented a model of human capital accumulation to better understand the take-of-rom stagnation to growth from 1500 to 2000 AD, which is consistent with the changing cross-sectional relationship between income and fertility as well as the decline in the concentration of wealth.
Abstract: This paper presents a model of human capital accumulation to better understand the take-ofrom stagnation to growth from 1500 to 2000 AD. Finitely lived house- holds choose the quantity and quality of children. The key ingredient of the model is a spillover from parents to children in the accumulation of human capital and an economywide spillover. Depending on the size of the spillovers, the model can generate protracted transitions. Starting from an initial level of human capital, the economy can take centuries to reach 95% of the steady state output per capita with a half-life of around 250 years. The model can rationalize the demographic transi- tion as well as the industrial revolution without resorting to exogenous changes in productivity. It is consistent with the changing cross-sectional relationship between income and fertility as well as the decline in the concentration of wealth. Macro evidence on convergence lends support to our formulation.

11 citations

Journal ArticleDOI
TL;DR: This paper found that low-income students in Massachusetts have lower intended college enrollment rates than higher income students but also have dramatically lower skills and attend lower-quality school districts, and that inclusion of skill controls greatly reduces but does not eliminate this intended enrollment gap.
Abstract: Low college enrollment rates among low-income students may stem from a combination of credit constraints, low academic skill, and low-quality schools. Recent Massachusetts data allow the first use of school district fixed effects in the analysis of credit constraints, leading to four findings. First, low-income students in Massachusetts have lower intended college enrollment rates than higher income students but also have dramatically lower skills and attend lower-quality school districts. Second, inclusion of skill controls greatly reduces but does not eliminate this intended enrollment gap. Third, inclusion of school district fixed effects has little further impact, with low-income students eight percentage points less likely to intend enrollment than higher income students of the same skill and from the same school district. Fourth, medium- and high-skilled low-income students appear the most constrained. State governments could use the methods employed here to target financial aid more effici...

11 citations

Journal ArticleDOI
TL;DR: Evidence is provided that the effects operate through reduced income and labor force participation, and matching with a lower “quality” spouse, and that teenage childbearing has a particularly acute effect among minorities.
Abstract: This paper explores the effect of teenage childbearing on long-term health outcomes and behaviors of mothers using the Midlife Development in the US dataset. Within-family estimations, using samples of siblings, and twin pairs, are employed to overcome the bias generated by unobserved family background and genetic traits. The results suggest no significant effects on health outcomes, and modest effects on health behaviors, including exercise and preventive care. However, accounting for life-cycle effects demonstrates that teenage childbearing has significant effects on both health outcomes and behaviors early in life, but very few significant effects later in life. Moreover, teenage childbearing has a particularly acute effect among minorities. Finally, this paper provides evidence that the effects operate through reduced income and labor force participation, and matching with a lower “quality” spouse.

11 citations

01 Jan 2009
TL;DR: This paper used data on refugees admitted to The Netherlands that include registration of education in their homeland by immigration officers and investigated the quality and reliability of the registrations and then used them to assess effects on refugees' economic position during the first 5 years after arrival.
Abstract: We use data on refugees admitted to The Netherlands that include registration of education in their homeland by immigration officers. Such data are seldom available. We investigate the quality and reliability of the registrations and then use them to assess effects on refugees9 economic position during the first 5 years after arrival. The most remarkable finding is the absence of returns to higher education.

11 citations

Journal ArticleDOI
TL;DR: In this article, the impact of fixed-term contracts (FTCs) on labour productivity, wages and productivity-wage gaps was investigated in a Belgian linked employer-employee panel data covering the period 1999-2006.
Abstract: Purpose – The purpose of this paper is to estimate the impact of fixed-term contracts (FTCs) on labour productivity, wages (i.e. labour cost), and productivity-wage gaps (i.e. profits). Design/methodology/approach – The authors apply dynamic panel data techniques to detailed Belgian linked employer-employee panel data covering the period 1999-2006. Findings – Results indicate that FTCs exert stronger positive effects on productivity than on wages and (accordingly) that the use of FTCs increases firms’ profitability. Originality/value – This paper is one of the first to examine the FTC-productivity-wage nexus while addressing three important methodological issues related to the state dependency of the three explained variables, to firm time-invariant heterogeneity, and to the endogeneity of FTCs.

11 citations