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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: Using longitudinal data for Canada, the probability of participating in employer supported course enrollment for mid career workers and the wage impacts of those adult educational investments are analyzed in this article, where the authors find strong positive effects of employer-supported course enrollment on wage changes over time, ranging from 68 to 77 percent wage growth for men and 75 to 93 percent for women.
Abstract: Using longitudinal data for Canada, the probability of participating in employer supported course enrollment for mid career workers and the wage impacts of those adult educational investments are analyzed Probability of participation in employer supported course enrollment is increasing with age, job tenure and education, and is lower for visible minority workers Using a parametric difference-in-differences model to minimize the effects of selection into training, we find strong positive effects of employer supported course enrollment on wage changes over time The estimated effect ranges from 68 to 77 percent wage growth for men and 75 to 93 percent wage growth for women When the linear specification of the outcome equation is relaxed and an empirical common support is implemented through semiparametric difference-in-differences matching methods, the average treatment effect on the treated estimates from the log wage change models were smaller in magnitude than the corresponding parametric estimates but were typically still statistically significant and in the range of 42 to 76 percent for men and 76 to 71 percent for women An analysis of respondents’ health outcomes shows no clear relationship with participation in employer supported course enrollment

2 citations

Posted Content
TL;DR: In this paper, the authors used a natural experiment in the fee abolition for West German secondary schools to identify its effect on enrollment and to obtain an estimate of the price elasticity of demand for education.
Abstract: This study utilizes a natural experiment in the fee abolition for West German secondary schools to identify its effect on enrollment and to obtain an estimate of the price elasticity of demand for education. The analysis is based on administrative school enrollment statistics as well as on representative individual-level data from three annual surveys of the German Mikrozensus. Estimates suggest that enrollment in Advanced Schools increased by about six percent after the fee abolition, where the results are sensitive to the specification choice. The positive enrollment effect of fee abolition for women exceeds that for men. A fifty percent reduction in fees is associated with an overall change in enrollment rates by 3 percent, where the elasticity of the demand for female education again exceeds that for males.

2 citations

01 Jan 2004
TL;DR: This paper presented a synthesis of the papers presented at the Conference on the Econometrics of education: Modeling Selectivity and Outcomes, held at CIRANO, April 26 and 27, 2002.
Abstract: This document offers a synthesis of the papers presented at the Conference on the Econometrics of Education: Modeling Selectivity and Outcomes, held at CIRANO, April 26 and 27, 2002. The papers serve as a pretext to draw a non exhaustive survey of the state of research in the economics of education. The methods of the economics of education are treated first, followed by a discussion of two important findings of recent research: the variance of the returns to education, and the risk associated with human capital investment. Finally, a series of policy issues are presented: tuition fees, parental contribution to education funding, school vouchers, school dropout, and affirmative action programs. Ce document effectue une synthese des travaux presentes a la conference sur l'econometrie de l'education tenue au CIRANO les 26 et 27 avril 2002, intitulee Conference on the Econometrics of Education: Modeling Selectivity and Outcomes. Les textes de la conference servent ici de pretexte a un survol non exhaustif de l'etat de la recherche en economie de l'education. Les methodes de l'economie de l'education sont d'abord traitees. Deux importants constats de la recherche recente sont ensuite discutes: la variabilite des rendements de l'education et le risque associe a l'investissement en capital humain. Enfin, un ensemble de problematiques de politique publique sont presentees: les frais de scolarite, la contribution parentale au financement de l'education, les « bons d'education », l'abandon scolaire, et les programmes de discrimination positive.

2 citations

Journal ArticleDOI
Wael Moussa1
TL;DR: The authors examined the impact of compulsory school attendance on high school graduation rates and grade attainment, focusing the analysis on ninth and tenth grade cohorts and found that an additional year in compulsory attendance leads to an increase of 9 to 12 percent in the probability of progressing to grades 11 and 12, and raises the probability for graduating from high school by 9 to 14 percent, depending on the specification.
Abstract: High school graduation rates are a central policy topic in the United States and have been shown to be stagnant for the past three decades. Using student-level administrative data from New York City Public Schools, I examine the impact of compulsory school attendance on high school graduation rates and grade attainment, focusing the analysis on ninth and tenth grade cohorts. I exploit the interaction between the school start-age cutoff and compulsory attendance age requirement to identify the effect of compulsory schooling. I find that an additional year in compulsory attendance leads to an increase of 9 to 12 percent in the probability of progressing to grades 11 and 12, and raises the probability of graduating from high school by 9 to 14 percent, depending on the specification.

2 citations