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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.
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Journal Article•
TL;DR: In this article, the role of education for preparing the labor force of the middle of the 21st century is discussed, which can then be translated into changes in core curriculum and instructional practices that incorporate increasing use of educational technologies.
Abstract: What is the role of education for preparing the labor force of the middle of the 21st century? The most conventional response is that we need to specify the 21st century skills that will be required. These can then be translated into changes in core curriculum and instructional practices that incorporate increasing use of educational technologies to produce a capable and competitive labor force as well as measures for assessment.
8 citations
DOI•
27 Dec 2016TL;DR: In this article, a measure of overeducation and undereducation is proposed on the basis of the ISCO 08 classification of occupations, which is defined as the difference between the level of qualifications held by employees and those required by the type of work they do.
Abstract: Qualification mismatch is defined as the difference between the level of qualifications held by employees and those required by the type of work they do. Basing on Kiker et al. (1997), a measure of overeducation and undereducation is proposed on the basis of the ISCO 08 classification of occupations. The dominant education level is determined for a given occupation’s 3-digit group on the basis of the distribution of education levels for employees in that occupation. Each individual having exactly the dominant level of education is considered well-matched. Those with higher levels of education are considered overeducated, those with lower levels − undereducated. An extended Mincer wage regression model with Heckman correction for non-random selection is estimated, using LFS data for Poland for the second quarter of 2013. Significant wage penalties are found in cases of overeducation status, along with positive wage premia for being undereducated, this confirming findings to be noted in the literature of other countries. Applying an approach after Duncan and Hoffman (1981), I find significant positive returns to years of overschooling and negative for underschooling. Young participants on the labour market (graduates) are less penalised for being overeducated, which suggests their overeducation is not necessarily a manifestation of lower ability.
8 citations
TL;DR: In this paper, quantile regressions are used to estimate wage equations of different ownerships in the private sector and state-owned enterprises (SOEs), and it is found that the growth rates of the wages at the bottom of the conditional distribution of wages are higher than those at the top in SOEs.
Abstract: In this paper, quantile regressions is used to estimate wage equations of different ownerships. Quantile regressions give us distributions rather than a single estimate of the returns both to education and experience in each ownership sector. For state-owned enterprises (SOE), the returns to education tended to be larger at the bottom of the conditional distribution of wages in 1991 and 1993, and there was no such trend in 1997. For the private sector, however, the returns to education tended to be larger at the top positions in 1993 and 1997. It is also found that the growth rates of the wages at the bottom of the conditional distribution of wages are higher than those at the top in SOEs. No such patterns for the private sector is found. It is suggested the wage mechanism in the private sector is more market-oriented.
8 citations
TL;DR: The authors investigated whether mothers' participation in post-compulsory education impacts on children's relative inequalities across four developmental outcomes and found that the additional year of maternal schooling was significantly associated with relative improvements in mathematics attainment for their children, but no significant differences for reading or behavioural outcomes.
Abstract: This paper investigates whether mothers’ participation in post‐compulsory education impacts on children’s relative inequalities across four developmental outcomes. The empirical analysis uses information from children born in 1958 in Britain. Mothers of the 1958 British cohort were affected by the 1947 school leaving age reform, which increased the age of compulsory schooling from 14 to 15 years. We selected the first‐born cohort members whose mothers were born in 1933 and 1934 and whose mothers completed compulsory schooling only. We found that the additional year of maternal schooling was significantly associated with relative improvements in mathematics attainment for their children, but no significant differences for reading or behavioural outcomes. The impact on mathematics was mainly for boys. These results suggest wider dispersion in mathematics attainment between sons whose mothers benefited from the additional year of schooling in 1947 and those whose mothers did not.
8 citations
Posted Content•
TL;DR: In this paper, the authors combine a regression discontinuity design with rich data on academic and labor market outcomes for a large sample of Florida students to identify the returns to four-year college for students on the academic margin of college admission.
Abstract: I combine a regression discontinuity design with rich data on academic and labor market outcomes for a large sample of Florida students to identify the returns to four-year college for students on the academic margin of college admission. In addition, I develop a theoretical model of college choice with and without credit constraints that allows for intuitive tests of the importance of credit constraints within this population. I find that students who obtain high school grades just above the threshold value for admissions eligibility at a large public university in Florida are much more likely to attend a four-year college and much less likely to attend a community college than students with grades just below the threshold. The earnings returns to a year of four-year college for affected students are 8.7 percent, nearly identical to returns to college for the population of Florida high school students. Consistent with the credit constraints hypothesis, poorer students who are more likely to be credit constrained work more while in college and realize higher post-college returns.
8 citations