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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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TL;DR: The authors examined the effect of ethnic capital and human capital on immigrants' earnings assimilation using an eight-year Australian panel data set (HILDA) and found that immigrants' labor market integration is significantly affected by their ethnic group local concentration and resources.
Abstract: Do ethnic enclaves assist or hinder immigrants in their economic integration? In this paper we examine the effect of ‘ethnic capital’ (e.g. ethnic network and ethnic concentration) on immigrants’ earnings assimilation. We adopt a “spatial autoregressive network approach” to construct a dynamic network variable from micro-panel-data to capture the effects of spatial-ethnic-specific resource networks for immigrants. The spatial lag structure is combined with a Hausman-Taylor (1981) panel data model which allows for some endogeneity. We examine the effects of ethnic capital and human capital using an eight-year Australian panel data set (HILDA). Results show that immigrants’ labor market integration is significantly affected by their ethnic group local concentration and resources.
8 citations
19 Dec 2013
TL;DR: In this article, a new form of education, which encompasses an existential framework of pedagogy, is able to foster empathic emotions in students leading them to make decisions that are aligned with a sustainable socio-economic model.
Abstract: As a result of the lack of authenticity in modern standardized societies, an individual's identity and purpose are created through physical goods as opposed to the intrinsic appreciation of the individual's role in society. This creates a precise dichotomy between the affluent lifestyle of the corporate worker and human fulfillment and empathy. This paper demonstrates how a new form of education, which encompasses an existential framework of pedagogy, is able to foster empathic emotions in students leading them to make decisions that are aligned with a sustainable socio-economic model. The paper first outlines the ecological and human development problems caused by modern capitalism. Second, it analyzes the historical circumstances that have borne capitalism and explains, through sociological and anthropological theory, how the logic of capitalism has become ubiquitous, self-perpetuating and obsolete. Lastly, a transformation in education is proposed as a viable solution to overcome the mentioned cognitive trappings.
8 citations
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TL;DR: The authors used household survey data from 2004 to estimate the determinants of earnings in Indonesia, a country where non-salaried work is widespread and where earnings data are available for salaried employees only.
Abstract: This paper uses household survey (Sakernas) data from 2004 to estimate the determinants of earnings in Indonesia, a country where non-salaried work is widespread and where earnings data are available for salaried employees only. We deal with the selection bias by estimating a full-information maximum likelihood system of equations, where earnings are observed for salaried employees, and selection into the labour market is modelled in a multinomial setting. We also deal with reverse causality between educational attainment and earnings by instrumenting years of schooling in both the multinomial selection and the earnings equations. Our identication strategy, following Duo (2001), uses infor
8 citations