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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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Book ChapterDOI
20 Dec 2018
TL;DR: For example, this paper reported that women in the US earn an average wage from earns., hours, and the marginal tax rate facing woman is 1.1. inlf = 1 if in labor force, 1975 2. hours hours worked, 1975 3. kidslt6 # kids < 6 years 4. kidsge6 # children 6-18 5. age woman’s age in yrs 6. educ years of schooling 7. wage estimated wage from earn., hours 8. repwage reported wage at interview in 1976 9. hushrs hours worked by husband,
Abstract: 1. inlf =1 if in labor force, 1975 2. hours hours worked, 1975 3. kidslt6 # kids < 6 years 4. kidsge6 # kids 6-18 5. age woman’s age in yrs 6. educ years of schooling 7. wage estimated wage from earns., hours 8. repwage reported wage at interview in 1976 9. hushrs hours worked by husband, 1975 10. husage husband’s age 11. huseduc husband’s years of schooling 12. huswage husband’s hourly wage, 1975 13. faminc family income, 1975 14. mtr fed. marginal tax rate facing woman 15. motheduc mother’s years of schooling 16. fatheduc father’s years of schooling 17. unem unem. rate in county of resid. 18. city =1 if live in SMSA 19. exper actual labor mkt exper 20. nwifeinc (faminc wage*hours)/1000 21. lwage log(wage) 22. expersq exper^2

2 citations

Posted Content
TL;DR: In this article, the authors evaluate le effets des competences en litteratie et en numeratie of decrocheurs du secondaire au Canada, and determine that these competences ont des repercussions significatives sur la probabilite d'etre occupe, ainsi que sur le nombre d'heures and de semaines de travail for les hommes and for les femmes, aini qu'une forte influence (directe) sur les revenus des homenes, mais pas sur ce
Abstract: La presente etude vise a evaluer les effets des competences en litteratie et en numeratie sur les resultats sur le marche du travail des decrocheurs du secondaire au Canada. Nous avons determine que ces competences ont des repercussions significatives sur la probabilite d'etre occupe, ainsi que sur le nombre d'heures et de semaines de travail pour les hommes et pour les femmes, ainsi qu'une forte influence (directe) sur les revenus des hommes, mais pas sur ceux des femmes. Selon ces resultats, le programme d'etudes secondaires qui permet le developpement de competences en litteratie et en numeratie pourrait avoir des retombees significatives, meme pour ceux qui ne le terminent pas et qui se retrouvent au bas de l'echelle sur le marche du travail. Nos conclusions laissent aussi supposer que les programmes de formation destines aux decrocheurs pourraient ameliorer substantiellement les resultats de ces personnes sur le marche du travail en leur permettant de developper ces competences de base. Elles ont aussi des repercussions du point de vue de la theorie de la dualite du marche du travail, etant donne qu'on part souvent du principe que le marche secondaire se caracterise par des rendements minimes du capital humain, ce qui va a l'encontre des resultats presentes ici.

2 citations

01 Jan 2010
TL;DR: In this paper, the authors identify the strongest predictors of intention to pursue higher education (HE) among a sample of Irish secondary school students, including socio-economic status (SES), parental occupation, parental education, gender, family structure, and academic self-efficacy.
Abstract: The present study aimed to identify the strongest predictors of intention to pursue higher education (HE) among a sample of Irish secondary school students. The predictors under investigation were school socio-economic status (SES), parental occupation, parental education, gender, family structure, and academic self-efficacy. One hundred and thirty nine participants took part in the study, with an even gender breakdown (70 females and 69 males) and a mean age of 16.04 years. Standard multiple regression analysis revealed that school SES was the only statistically significant predictor, explaining 11% of the variance in intention to pursue HE. Specifically, low SES schools differed from both medium and high SES schools on intentions to pursue HE but medium and high SES schools did not differ from each other. The other predictor variables did not contribute significantly to the predictive ability of the model. This provided only partial support for the hypothesis. Implications for research in the area and future directions are discussed.

2 citations

Journal ArticleDOI
TL;DR: In this article, the authors compared the expected rate of return to their own college degree and comparing it to those of students with other majors in a labor economics course with data from the surveys of the National Association of Colleges and Employers.
Abstract: Calculating the expected rate of return to their own college degree and comparing it to those of students with other majors can be an interesting and fruitful project for students in a labor economics course. Data from the surveys of the National Association of Colleges and Employers (not all that well known but available in most college career-planning and placement offices) allow students to use current starting salary offers reported for about 80 different major fields and another 80 types of occupations (first jobs) to estimate the financial payoffs to their college training. In this article, the author discusses the various steps, data sources needed, and caveats for students and instructors working this exercise.

2 citations

Journal ArticleDOI
TL;DR: This article used quantile regression techniques to analyze the returns to education across the conditional distribution of wages from individuals separated both by gender and skin color, while accounting for the endogeneity of the education decisions.
Abstract: This paper uses quantile regression techniques to analyze the returns to education across the conditional distribution of wages from individuals separated both by gender and skin color, while accounting for the endogeneity of the education decisions. Using data from the Brazilian households survey (PNAD) for the years of 1988 and 1996, the results indicate that the returns to education are significantly heterogeneous across the distribution of earnings, as well as the wage gap between the groups, according to gender and skin color. Moreover, there has been a significant improvement in the wage differentials between the groups across the years.

2 citations