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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.
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TL;DR: The evidence base for these policies is small, non-experimental and offers mixed results as discussed by the authors, while the evidence base of targeted early childhood interventions is largely experimental and offers strong guidance.
Abstract: Universality is a hallmark of Canadian social policy for very young children. The evidence base for these policies is small, non-experimental and offers mixed results. In contrast the evidence base for targeted early childhood interventions is largely experimental and offers strong guidance. Policy makers and advocates often cite the research on targeted programs in support of universal programs, although this is problematic for a number of reasons. Universal programs require a better understanding of the developmental trajectories of more advantaged children. Evidence from the NLSCY suggests there are some potentially important differences in the association of early and later childhood developmental outcomes by family economic resources.

7 citations

01 Jan 2008
TL;DR: In this article, the authors examined child labour and schooling in Portugal from a historical and contemporary perspective, and attempted to strike a balance between research of the local context and a comparison with an international context.
Abstract: textThis thesis examines child labour and schooling in Portugal from a historical and contemporary perspective and comprises three essays. Throughout the thesis, I attempt to strike a balance between research of the local context and a comparison with an international context.

7 citations

Book ChapterDOI
TL;DR: In this paper, the authors address the earnings impact of continuing training in the personal services sector in Germany, and calculate the average training effect on earnings, and differentiate between the wage effects for employees with different qualifications and professional status.
Abstract: This chapter addresses the earnings impact of continuing training in the personal services sector in Germany. On the one hand the personal services sector is among the sectors with the highest employment growth; on the other hand the share of low-paid workers is higher than in other sectors. While our knowledge of the specific situation of low-paid workers in this sector is limited (Asplund and Salverda, 2004), an obvious way of increasing both productivity and earnings is for firms to increase their investment in employee training (Hughes etal., 2004). The provision of training constitutes a major part of human capital investment (Heckman, 1999). An important proviso, however, is that training increases the earnings of this group of employees. Therefore we not only calculate the average training effect on earnings in the personal services sector, but also differentiate between the wage effects for employees with different qualifications and professional status.

7 citations

Journal ArticleDOI
TL;DR: In this paper, the authors report impacts from a targeted program in British Columbia for Aboriginal and English as a Second Language (ESL) students using administrative data, and find that the targeted FDK program increased grade 4 educational attainment, producing statistically and socially significant impacts.
Abstract: Full day kindergarten (FDK) is expanding across North America, but program impacts remain poorly understood. Using administrative data, this paper reports impacts from a targeted program in British Columbia for Aboriginal and English as a Second Language (ESL) students. Staged implementation of FDK created natural controls, allowing unbiased two-stage least squares (instrumental variables) estimates of program impacts. We find that the targeted FDK program increased grade 4 educational attainment, producing statistically and socially significant impacts. Further research, longer follow-up, and rigorous methods are needed to guide FDK policy for the general student population.

7 citations

Book
17 Sep 2012
TL;DR: In this paper, the authors discuss the difference between wages and total compensation: is there a difference between employee value of compensation and the cost to companies? Part II. Paying executives, athletes, entertainers and other'superstars' Part III. Compensation in nonprofit organizations Part IV. What You Can Do To Make More and Conclusions: 14.
Abstract: Part I. How Hard Can This Be?: 1. Common sense, economics, and 'HR'?: how to pay 2. Wages, the wage distribution, and wage inequality 3. The facts: who makes what and what are their characteristics? 4. The difference between wages and total compensation: is there a difference between employee value of compensation and the cost to companies? Part II. How Organizations Set Pay Structure and Why: 5. Business strategy and compensation strategy: where you work matters 6. What's in a job?: Job analysis, job evaluation, and internal comparisons 7. Matching the internal organizational structure to the right market data: how and how much to pay 8. Paying executives, athletes, entertainers and other 'superstars' Part III. How People Are Paid Can Mean As Much As How Much They Are Paid: 9. Evaluating performance, incentives, and incentive pay 10. Stock and stock options 11. Pay mix: why offer benefits? Would employees prefer cash? 12. International compensation 13. Compensation in nonprofit organizations Part IV. What You Can Do To Make More and Conclusions: 14. What you can do now to make more now and later 15. Concluding thoughts.

7 citations