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The causal effect of education on earnings
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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.read more
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Dissertation
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Wage Determination in Northeast Brazil
TL;DR: In this paper, the authors analyzed the labor markets in the Northeast region of Brazil that includes Pernambuco, Bahia, and Ceara states and found that basic schooling matters for all four geographical areas and across the income distribution.
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Three Essays on the Economics of Education
Abstract: Chapter 1 utilizes confidential student achievement information obtained under a signed confidentiality agreement with the Pennsylvania Department of Education. The authors wish to thank Jinxiang Liu for programming and database support. The authors benefited from discussions with Maria Ferreyra, Margaret McMacken, John Garrow, Dave Davare, Brian Junker, participants at the October 3, 2008 seminar on applied microeconomics at the Tepper School, participants at the May 23, 2009 seminar at Heinz College, and comments received at the 2009 Annual Meeting of the American Economic Finance Association and the 2009 Summer Meeting of the North American Econometric Society. Financial support from the Heinz Endowments and the William Penn Foundation is gratefully acknowledged. Responsibility for the findings and interpretation of this paper rests solely with the authors.
Regarding Chapter 2, I would like to thank Lowell Taylor, Maria Marta Ferrerya, and Mel Stephens, Heinz and Tepper seminar participants, Melanie Zilora, Billie Morrow Davis, John Gardner, and Abby Linn. I also thank Dave Davare, Anne Herald, and the staff of the PSBA.
Chapter 3 has benefited from the advice of Lowell Taylor, Melanie Zilora, Billie Morrow Davis, Aaron Turner, my committee, and comments received at my dissertation proposal. I also thank Stephanie Cellini and Latika Chaudhary for their help in replicating their paper. I gratefully invite the comments and feedback of any readers of this version. This research was conducted with restricted access to Bureau of Labor Statistics (BLS) data. The views expressed here do not necessarily reflect the views of the BLS.
This dissertation is dedicated to my paternal grandmother, Doris Clay, who made me promise to finish my degree. All chapters would have been impossible without the loving support of my husband, Aaron Turner, and my parents, Jan and David Clay. Honorable mentions are due to my eighth-grade English teacher, Mr. Ford, my high-school history and economics teacher, Mr. Copley, and my undergraduate advisor, Rajiv Sethi. This work is a small piece of their legacies as teachers. Finally, my children, Ryan and Tristan Turner, both provided love and support during the latter half of the writing of this dissertation, and deserve thanks for sharing their infancy with my academic endeavors.
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