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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: A previous version of this paper was presented at the 59th National Conference of the Australian Agricultural and Resource Economics Society, 10-13 February 2015, Rotorua, New Zealand as mentioned in this paper.
Abstract: A previous version of this paper was presented at the 59th National Conference of the Australian Agricultural and Resource Economics Society, 10-13 February 2015, Rotorua, New Zealand
4 citations
TL;DR: In this article, the effectiveness of shareholder activism as a change mechanism for improving gender diversity on corporate boards was examined, and it was shown that shareholders use both internal pressure through private negotiations that lead to a withdrawn proposal, and external pressure by submitting a proposal to vote in the annual shareholders' meeting to draw public attention.
4 citations
01 Jan 2004
TL;DR: In this paper, the authors identify the factors that determine a location's growth performance and divide the factors into two groups, i.e., 1 advantage and 2 advantage, which are the conditions that provide the environment in which new activities can be profitably developed.
Abstract: The emergence of new economic activities is the driving force of economic development. The development of such activities is often ‘lumpy’, manifesting itself in rapid growth of particular regions or sectors. Recognition of these facts requires a reorientation of the analytical frameworks and empirical approaches that are used to investigate growth. In particular, we need to understand what drives growth at the microeconomic level. The paper starts by reviewing some of the evidence on the spatial and sectoral concentration of fast growing activities. It then outlines some simple theory which helps us to understand why particular locations experience rapid growth whilst others remain backward. We find it useful to divide the factors that determine a location’s growth performance into two groups, that we term ‘1 advantage’ and ‘2 advantage’. ‘1 advantage’ refers to the conditions that provide the environment in which new activities can be profitably developed. They include most of the factors that traditional theory has focussed on, such as access to inputs (labour and capital), access to markets, provision of basic infrastructure and the institutional environment. ‘2 advantage’ factors increase returns to scale and can lead to cumulative causation processes. They may be acquired by learning, through technological spillovers, and by the development of thick markets of suppliers and local skills. Furthermore, these increasing returns are often external to the firm and thus associated with market failure. It is increasing returns that underlie the ‘lumpiness’ of development. This analysis suggests that empirical investigation of the drivers of growth must shift down to a more microeconomic level. Such an analysis has become more feasible as data at the sub-national level has become more available. By viewing recent empirical evidence on drivers of growth through our analytical framework we are able to begin to sketch out a microeconomic agenda for growth. We emphasize that it is the manner in which 1 and 2 advantages interact which shapes the pattern of development. Policy must therefore take into account the quite different natures of these advantages. We then turn to the specific example of structural change in India. During the postcolonial period India has been characterised by strong heterogeneity in manufacturing growth across states and sectors. We study three examples of how policy has affected manufacturing growth performance. The first concerns links between the direction of state level labour regulation and growth in the organised manufacturing sector. This helps to underline how a 1 advantage factor has affected the pattern of manufacturing growth across states in India. Our second example concerns how state led expansion of bank branches into rural areas has affected unregistered or informal manufacturing. This example brings home how a 1
4 citations
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TL;DR: The authors used survey data for Ireland and exploiting a major reform to education, the abolition of fees for secondary schools in 1968, showed that increases in education causes individuals to be significantly more tolerant of homosexuals.
Abstract: This paper addresses the question of whether higher levels of education contribute to greater tolerance of homosexuals. Using survey data for Ireland and exploiting a major reform to education, the abolition of fees for secondary schools in 1968, it is shown that increases in education causes individuals to be significantly more tolerant of homosexuals. Ignoring the endogeneity of education leads to much lower estimates of the effect of education. Replicating the model with data for the United Kingdom generates very similar results.
4 citations
TL;DR: In this paper, effective tax and subsidy rates (ETRs and ESRs) on human capital investment via post-secondary education are estimated for Canada in the years 2000 and 2006.
Abstract: . Effective tax and subsidy rates (ETRs and ESRs) on human capital investment via post-secondary education are estimated for Canada in the years 2000 and 2006. The flattening of the federal personal income tax structure in 2001 substantially reduced the tax disincentive for investment in human capital. Effective subsidy rates also declined as public spending did not keep pace with rising tuition fees. The change on the tax side was strong enough to dominate the subsidy reduction according to our main results, but disaggregation shows that this result did not hold in all cases. Results are shown for College, Master's, and PhD programs, in addition to Bachelor's degrees. They are also broken down by gender, and are shown for the 25th and 75th percentiles as well as the median. Provincial detail and 1997 results are provided in the case of Bachelor's graduates.
4 citations