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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 article, the authors examined the variables that affect the two major determinants of happiness: income and positive attitude, and showed that more schooling by increasing income is likely to enhance an individual's personal happiness.
Abstract: With a view to exploring alternative methods of augmenting personal happiness, the current study examines the variables that affect the two major determinants of happiness: income and positive attitude. Income, the objective determinant of happiness, is already known in the literature to depend on schooling. Following an instrumental variable approach, the current study demonstrates that more schooling by increasing income is likely to enhance an individual’s personal happiness. Following the propensity score matching approach, the current study further demonstrates that religious attendance affects positive attitude, the subjective determinant of happiness, positively. Treating religious attendance as a proxy for value education, the study recommends supplementing traditional schooling with value education to simultaneously improve income and attitude, leading to an increase in personal happiness.
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TL;DR: Jogini are twice more likely than other women who are used for sexual intercourse in India to be HIV positive, and their rate of mortality from HIV is 10 times the total mortality rate for all women in India.
Abstract: Jogini is the name for a female sexually exploited temple attendant and is used interchangeably with Devadasi in the state of Andhra Pradesh, India. Jogini are twice more likely than other women who are used for sexual intercourse in India to be HIV positive, and their rate of mortality from HIV is 10 times the total mortality rate for all women in India. The four states in India with the most Jogini also have the highest prevalence of HIV. The following case is unfortunately typical of the Jogini and sheds light on a potentially disastrous public health problem in rural South India.
4 citations
01 Jan 2004
TL;DR: In this article, the authors provide an analytical review of previous estimates of the rate of return on schooling investments in France and measure how these estimates vary over time, with the nature of data and by estimation methods.
Abstract: In this paper, we provide an analytical review of previous estimates of the rate of return on schooling investments in France and measure how these estimates vary over time, with the nature of data and by estimation methods. Improving the Ashenfelter Harmon and Oosterbeek (1999) approach (denoted below AHO), we do not find evidence of reporting bias in the estimates. Furthermore, introducing possible “within study correlations” does not significantly affect the estimations. Nevertheless, we find that differences in returns by estimation methods still exist. Differences of specification in earning functions have also to be taken into account as well as the composition of sample (male/female, public/private sector). We also find that estimated returns have been decreasing in France since the end of the 60’ and suggest a “meta Phillips curve” effect as an explanation for the contrasted evolution of the return between France and the US.
4 citations
Journal Article•
TL;DR: In this paper, the authors analyze the effect of Korean firms' human capital investment on their employees' performance and seek ways to strategically utilize it, and evaluate the effectiveness of such investment from the perspective of employees' performances.
Abstract: The purpose of this study is to analyze the effect of Korean firms' human capital investment on their employees' performance, and to seek ways to strategically utilize it. A major Korean financial corporation was selected and its data related to personnel affairs and education was analyzed to determine the effects of school education, job training, job experience, language ability, and certification on employee's performance. According to the result, school education generally has a positive effect. Job training has showed different effect on employees' performance and in particular it had little effect on employees' performance in job families requiring an advanced academic degree.Key words: education; human capital investment; job performance; Korean firms; trainingINTRODUCTIONThe importance of investment in human capital by nations, businesses, and individuals for economic growth has been emphasized since Schultz (1961) and Becker (1975) invented the concept of human capital. Thus far, a number of studies were conducted on examining the impact of human resource development and education level on wage difference.In the meantime, Korean businesses have focused on education level and language ability when they hire new employees. After recruitment, they have made strenuous efforts to develop human capital by building employees' capacity through the use of education and training, OJT, degree programs, and support for certification acquisition.Despite the above, the level of investment in education and training in Korean companies is still found to be significantly lower than that of foreign companies. In the case of large companies from the U.S, they invest on average 2-3% of their revenues in employees' training (American Society for Training and Development 2010). However, in the case of large corporations in Korea, the cost of employees' training accounts for only 1.34% of the entire labour cost (Korean Ministry of Labour 2009). In addition, according to the Korea Chamber of Commerce and Industry (2008), the participation rate of Korean adult workers in work-related training was the lowest among OECD members. Consequently, the productivity level of the Korean workforce is 40% of that of advanced countries such as, the U.S. and the U.K.This clearly demonstrates that Korean companies, from a strategic perspective, have not fully comprehended the concept of human capital, and that there is insufficient research as to the effect of corporate investment in human capital of their employees. In other words, there is a substantial importance for research on the question as to whether or not companies' investment in human capital of their employees has actually had a positive effect on employees' performance, and on the issue as to whether or not work-related investment by companies in their employees is made strategically by considering job performance. The reason why there is lack of research on the strategic enhancement of human capital investment is, first, it is difficult for the academia that come up with academic theories to gain access to corporate data, especially in Korea. It is challenging for corporations to produce and record the results of fair evaluation on employees' performance. There are limits that have acted as stumbling blocks for practical research.To overcome the problems and limitations of previous studies, this study focuses on the evaluation of the effectiveness of Korean companies' human capital investment from the perspective of employees' performance, and, for improvements in employees' performance, on how to invest strategically in human capital to make it an efficient investment in a more practical way. Through this, this study tries to identify the effect of important components of human capital by focusing on the level of school education, job training, job experience, language ability, and certification on employees' performance. Furthermore, this study tries to build on academic knowledge by providing suggestive points for strategic employee HRD (human resource development) that Korean companies will consider in the future. …
4 citations
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TL;DR: In this article, the impact of the reforma of the General de Educación (GDE) on the economic impact of public education is evaluated, with the aim to evaluate the impact on the nivel educativo.
Abstract: En este trabajo se trata de evaluar el impacto economico de las politicas educativas tomando como ilustracion los cambios inducidos por la promulgacion y posterior implementacion de la Ley General de Educacion de 1970. Basandose en la interpretacion de la estimacion de Variables Instrumentales sugerida en Imbens y Angrist (1994) se estima el impacto economico de la reforma sobre aquellos individuos cuyo nivel educativo aumento gracias a dicha reforma. Classification-JEL : I21, I28, J24.
4 citations