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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, Schatzungen der durchschnittlichen privaten Ertragsrate des Hochschulstudiums in 21 OECD-Landern vorgestellt.
Abstract: In diesem Beitrag werden neue Schatzungen der durchschnittlichen privaten Ertragsrate des Hochschulstudiums in 21 OECD-Landern vorgestellt. Im Jahr 2001 streute die Ertragsrate international erheblich um ihren Durchschnitt von 8½ Prozent – von 4 Prozent fur Frauen in Italien bzw. 5 Prozent fur Manner in Spanien bis 14 Prozent in Irland. Fur den Durchschnitt eines Landes sind Geschlechterunterschiede meist gering. Deutschland bleibt mit einer Ertragsrate von 6¼ Prozent hinter dem OECD-Durchschnitt zuruck. Den grosten Beitrag zum Studienertrag liefert der im Vergleich zu Nicht-Akademikern hohere Stundenlohn („Lohnpramie“), den grosten Kostenblock stellt das wahrend des Studiums entgangene Einkommen dar. Masgeblich fur die Unterschiede zwischen den Landern sind die Bruttostundenlohnpramie (von 27 Prozent in Spanien bis 91 Prozent in den Vereinigten Staaten und Ungarn), die Studiendauer, die Grenzsteuerbelastung sowie die direkten Kosten des Studiums.
2 citations
TL;DR: This article used a Mixed Proportional Hazard Competing Risk Model (MPHRM) to classify quantiles of the wage distribution as competing risks faced by searching unemployed workers and found that unemployment insurance increases the likelihood that a searcher matches to higher paying jobs relative to low or medium paying jobs, rejecting the notion that wage offers and job arrival rates are independent.
2 citations
21 May 2015
TL;DR: This article found that the elasticity of children's income with respect to parents' income is between 0.13 and 0.38, which is at the lower end of what many of the academic studies in this field find.
Abstract: How much of a person’s income is determined by their parents? How do the education levels of the parents and children affect this relationship? What other variables are involved in the transmission of education and income across generations? These are the fundamental question that this paper seeks to address. After a literature review that goes over some of the most prominent work in this field, two models are created using data from the Panel Study of Income Dynamics. Model 1 finds the elasticity of children’s income with respect to parents’ income to be between 0.13 and 0.38, which is at the lower end of what many of the academic studies in this field find. Model 2, which includes only males, finds the elasticity of sons’ income with respect to dads’ income to be around 0.30, with some regions as high as 0.45. Overall, the data shows clearly that there is a link between the incomes of parents and the incomes of their children, and that education plays a major role in this link as well.
2 citations
Proceedings Article•
01 Jan 2010TL;DR: The results suggest that introduction of broadband Internet in schools is not enough to improve students' performance, and broadband deployment in schools needs to be accompanied by complementary measures that support the use of the technology in productive ways.
Abstract: This paper provides empirical evidence on the effects of broadband Internet usage in schools on student performance in terms of national exams scores. We use a rich panel of data that has information on test scores, as well as broadband usage for all schools in Portugal, allowing us to control for school-specific effects. Additionally we use an instrument to account for possible unobserved time-varying effects. For 9th grade students, our estimates indicate that a higher use of broadband Internet is detrimental for students' test scores, despite this effect seeming to be wearing off with time. We find that the adverse effect tends to be reinforced for boys and weakened for girls, compared to the pooled estimates. We also find that schools with worse performance right before the introduction of broadband Internet in schools suffered the most. Our results suggest that introduction of broadband Internet in schools is not enough to improve students' performance. Broadband deployment in schools needs to be accompanied by complementary measures that support the use of the technology in productive ways.
2 citations