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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: In this paper, the relationship between the conditions prevailing on the housing market and homelessness levels is made out with the help of a theoretical model from this model, a critical income ensuring positive housing consumption can be deduced; individuals with an income below this critical threshold end up homeless.
Abstract: Despite large-scale governmental efforts to combat homelessness, homelessness rates can only be reduced but not eliminated completely by the measures usually applied Hence, there is an obvious need to investigate additional factors which con-tribute to homelessness and gain insights on how to further reduce homelessness To begin with, the relationship between the conditions prevailing on the housing market and homelessness levels is made out with the help of a theoretical model From this model, a critical income ensuring positive housing consumption can be deduced; individuals with an income below this critical threshold end up homeless The empirical analysis draws on a panel data set comprising information on all dis-tricts (Kreise) of North Rhine-Westphalia from 2004-2009 The regression analysis underpins the theoretical results: High (net market) rents as well as low vacancy rates among small flats lead to rising homelessness Homelessness also increases when the share of long-term unemployed and of those with a monthly income below 700 is higher, since this makes it more difficult to reach the critical income needed to rent a flat Finally, some policy conclusions resulting from the analysis are pointed out
7 citations
Journal Article•
TL;DR: In this article, the authors analyse the okonomische Einordnung der beruflichen weiterbildung (FbW) als Teil der Aktiven Arbeitsmarktpolitik in Deutschland.
Abstract: Thema dieser Arbeit ist eine okonomische Einordnung der beruflichen Weiterbildung (FbW) als Teil der Aktiven Arbeitsmarktpolitik in Deutschland. Die Analyse erfolgt im Lichte des sektoralen Wandel, der Verschiebung der qualifikatorischen Arbeitsnachfrage und der vorauszusehenden Produktivitatseffekte im Zusammenhang mit einer alternden Gesellschaft. Auf Basis der Humankapitaltheorie wird zunachst theoretisch erortert, inwieweit sich FbW als Teil der Aktiven Arbeitsmarktpolitik aus Effizienz- und Verteilungsgesichtpunkten rechtfertigen lasst und in welcher Form FbW sinnvoll sein kann.
7 citations
Posted Content•
01 Jan 2013
TL;DR: This paper used a major change in the compulsory schooling policy in Turkey, which increased the mandatory duration from five to eight years, to estimate the causal effect of education on earnings and showed that the 2SLS estimates of the returns to education are much larger estimates than the OLS estimates.
Abstract: This paper uses a major change in the compulsory schooling policy in Turkey – which increased the mandatory duration from five to eight years -- to estimate the causal effect of education on earnings. The policy reform brought about a substantial rise in schooling attainment due to the high dropout rates at the end of compulsory schooling, the duration of extension, as well as the spillover effects of the policy on non-compulsory schooling years. Our results show that the 2SLS estimates of the returns to education are much larger estimates than the OLS estimates. These results also constitute the first causal estimates of the returns to education in the Turkish context and one of the few in developing country contexts.
7 citations
TL;DR: In this paper, the authors analyzed the rapid increase in earning inequality of urban China from 1988 to 2003, using annual urban household survey data from 6 provinces in different regions of China, and used quantile regression to address the relationship between education and earning inequality.
Abstract: Using annual urban household survey data from 6 provinces in different regions of China, we analyze the rapid increase in earning inequality of urban China from 1988 to 2003. We describe overall and residual inequality trends and use quantile regression to address the relationship between education and earning inequality. We find that returns to education are higher for the low earning individuals in the first half of this period conditional on their observable characteristics. This suggests that education has a negative impact upon within-group earning inequality. However, the situation is reversed during the recent half period. Using the Quantile-JMP decomposition technique we partition the observed distribution of earnings into ‘price’ components (earning coefficients) and ‘quantity’ components (labor force composition) and calculate, through simulation, the impact of education on changes in overall earning dispersion. The decomposition shows that the rise of earning dispersion between 1988 and 2003 is almost entirely accounted for by prices rather than quantities, and it attributes a large proportion to the overall effect of education. From 1988 to1997 education serves as the equalizing force to decrease earning inequality but it is the primary driving force which increases the earning inequality between 1997 and 2003. The empirical analysis also reveals that the overall effect of college and above education category on the growth of earning inequality is the most pronounced one.
7 citations
TL;DR: In this paper, the authors estimate earnings function parameters across alternative occupational paths, with an emphasis on identifying rates of return to post-school human capital investment, based on cross-sectional and synthetic cohort analysis using the 1973-2000 Current Population Surveys.
Abstract: This study estimates earnings function parameters across alternative occupational paths, with an emphasis on identifying rates of return to post-school human capital investment. Based on cross-sectional and synthetic cohort analysis using the 1973–2000 Current Population Surveys, estimates are obtained for men and women on the returns to schooling and the investment intensity, length, and returns from post-school training. Although the shapes of wage-experience profiles differ substantially across occupations and skill groups, evidence supports the theoretical prediction that rates of return are equivalent across alternative investment paths. Little evidence is found for an increase in returns to post-school training over time. By the 1990s, returns to schooling had risen to a level similar to the returns from post-school training.
7 citations