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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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01 Jan 2001
TL;DR: A curso de topicos recientes sobre temas de distribucion del ingreso, basado mayoritariamente en nuestros propios intereses de investigación as discussed by the authors, se busca motivar la investigacion empirica utilizando metodos.
Abstract: Este es un curso de topicos recientes sobre temas de distribucion del ingreso, basado mayoritariamente en nuestros propios intereses de investigacion. Se busca motivar la investigacion empirica utilizando metodos recientes. Se supone que los asistentes a este curso tienen una formacion previa en cuestiones distributivas, tanto conceptuales como metodologicas similar a la provista en los cursos de Distribucion del Ingreso y Econometria dictados en esta Maestria, El curso se dicta en tres bloques de cuatro clases cada uno.
3 citations
01 Mar 2010
TL;DR: In this article, the authors investigated the determinants of living standards (measured by per capita consumption expenditure) at the household level, addressing heterogeneity in the impact of education and endogeneity of educational attainment.
Abstract: This paper investigates the determinants of living standards (measured by per capita consumption expenditure) at the household level, addressing heterogeneity in the impact of education and endogeneity of educational attainment. The estimation results obtained through an instrumental variables quantile regression suggest that the endogeneity of education matters in determining the causal effect of education on living standards. On the other hand, no evidence of heterogeneity in the percentage impact of education is found. However, the results also provide evidence that the impact of other determinants varies significantly over the outcome (expenditure) distribution, and consequently a simulation based on the results shows that the level impact of education on consumption expenditure differs substantially between the instrumental variables quantile regression and standard instrumental variables regression results. The comparison of the two shows that the poverty alleviation impact of education estimated through the instrumental variables quantile regression are much smaller than the impact estimated through the standard instrumental variable regression.
3 citations
01 Jan 2013
TL;DR: In this article, a regression-discontinuity approach is used to identify the impact of additional educational attainment on the earnings of males or females in the province of Newfoundland and Labrador.
Abstract: In 1983-84 the Canadian province of Newfoundland moved from having a high school system with 11 grades to one with 12. This large exogenous source of variation in years of schooling is used to estimate the "causal" impact of an extra year of schooling holding the degree constant. Further, since the full population is treated, the effect does not reflect the return of a particular subgroup, and it comes closer to a general equilibrium effect than has been possible previously. A regression-discontinuity approach is taken to identify the impact of additional educational attainment. Although the increased years of schooling are clearly observable in the data, the policy change appears to have little or no impact on the earnings of males or females at the time of the 2001 census. ACKNOWLEDGEMENTS: The authors wish to thank Statistics Canada, through the RDC at McMaster University, for making available the census data. The views expressed here are those of the authors and do not necessarily reflect the views of Statistics Canada nor the government of Ontario. The authors also wish to thank Phil Oreopoulis for helpful suggestions. DRAFT: April 2013
3 citations
01 Jan 2011
TL;DR: In this paper, the authors found that the proportion of households who spend catastrophically on education and also find out which of the household characteristics significantly influence catastrophic expenditure on education, to provide basis for trend analysis of catastrophic expenditure in education in Ghana.
Abstract: The main objective of this study is to estimate the proportion of households who spend catastrophically on education and also find out which of the household characteristics significantly influence catastrophic expenditure on education and to provide basis for trend analysis of catastrophic expenditure on education in Ghana. Education is fundamental to human development and growth. However, cost of education is entirely not borne by the government and this shifts partly or in some cases wholly to the household who seeks the education for its members. There are some household factors that influence catastrophic spending on education and these were what the paper seeks to find out. It was evidenced from the Ghana Living Standards Survey (GLSS) round 4 data used that households with female heads have a higher tendency of spending catastrophically on education than that of households with male heads. Households whose heads are divorced or separated have the highest tendency of spending catastrophically on education. Households in coastal regions have the highest tendency of spending catastrophically on education. The study showed that sex, age, highest educational qualification of the head of household, size of household and the region in which a household is located are significant determinants of catastrophic spending on education.
3 citations