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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: In this paper, the authors proposed semi-and nonparametric approaches to estimate the public/private wage gap in Italy, and showed that the bias from parametric assumptions is as large as 10%.
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TL;DR: This paper examined the effect of specific education policies, such as ability grouping, preschool attendance, and participation in pre-primary education, on educational outcomes and equity for children of different abilities.
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TL;DR: A review of the most important scientific and policy research in the area of human capital, education achievement and learning and the need for a new nationally representative household panel for United States to provide the research resources necessary to keep the United States at the forefront of scientific andpolicy research in this area is presented in this paper.
Abstract: This paper reviews the most important scientific and policy research in the area of human capital, education achievement and learning and discusses the need for a new nationally representative household panel for the United States to provide the research resources necessary to keep the United States at the forefront of scientific and policy research in this area. Excellent panel data incorporating recent advances in panel design and innovative measures are required for addressing the most important policy issues. The major household panels internationally all have large sections devoted to hu- man capital, education achievement and learning. Within the broad framework of human capital there is overwhelming evidence of the importance of skills or abili- ties to lifetime success, most obviously in earnings, but also in many other outcomes relevant to policy makers. Increasingly human capital has been linked to areas such as health outcomes, marriage, fertility, social cohesion, immigrant assimilation, en- trepreneurship and criminal behavior. This report discusses the need for a new na- tionally representative household panel for the United States to provide the research resources necessary to keep the United States at the forefront of scientific and policy research in the area of human capital, education achievementand learning. Section 2 discusses the most important current scientific and policy issues in this area. Section 3 assesses the need for a new household panel to address these issues. What infor- mation needs to be collected is discussed in Section 4, with a special emphasis on innovativemeasuresto push forwardthe research agenda.Finally, Section 5 provides some conclusions and suggested priorities.

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TL;DR: This article examined the relationship between the productive efficiency of startup firms and their level of exports using the United States Census Bureau's 2007 Survey of Business Owners (SBE) and found that a small firm's exports are positively related to its level of productive efficiency.
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