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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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01 Jan 2017
TL;DR: In this paper, the authors investigate whether and how cohort differences explain differentiation in the educational effects on household's economic security, and find that a positive impact of education on economic security is strongest for the youngest cohort, in which a fraction of well-educated individuals is the highest.
Abstract: The paper is aimed to investigate whether and how cohort differences explain differentiation in the educational effects on household’s economic security. Cohorts are distinguished by common educational and professional experiences, controlling for economy conditions. The economic context covers: the beginning of transition in Poland (1990), Poland’s accession to the EU (2004) and the beginning of financial crisis (2008). The criteria for determining the cohorts refer to the periods of educational level attained, conditions of entering a labor market, improving qualification and a carrier stage in time of the last financial crises. The research covers three cohorts: cohort 1– respondents in age of 25–34 in 2013 – called „Children of transition; cohort 2 – respondents in age of 35–44 in 2013 – called „Youth of transition”; cohort 3 – respondents in age of 45–64 in 2013 – called „Adults of transition”. Economic security of households is defined as the ability to achieve income necessary for covering household needs at its suitable level and to create financial reserves to be at disposal in case of unfavorable accidence. A measure of economic security is calculated on a base of a structural equation model (SEM). The questionnaire survey is a source of data for observed variables. The survey was carried out by the professional polling agency in Poland in June 2013. The whole sample covers 800 respondents in age between 25 to 64. The findings reveal that a positive impact of education on economic security is the strongest for the youngest cohort, in which a fraction of well-educated individuals is the highest. Higher quality of human capital allows the younger cohort to achieve the same level of economic security like the cohort older by several years. Higher educational level attained, less households insecure economically. The secondary level of education among the youngest cohort does not create the ability to ensure economic security for a family.
Posted Content
TL;DR: In this article, the authors used BCS data to estimate and decompose the intergenerational persistence in top job status to assess the contribution of four potential transmission mechanisms for this advantage: non-cognitive skills, cognitive skills, job aspirations and educational attainment.
Abstract: Enabling fair access to professional careers is an important strand of UK social mobility policy, however many high status employers demand a wide range of 'soft skills' in addition to strong cognitive skills to identify the best talent which can disadvantage individuals from less privileged backgrounds. This paper uses BCS data to estimate and decompose the intergenerational persistence in top job status to assess the contribution of four potential transmission mechanisms for this advantage: non-cognitive skills, cognitive skills, job aspirations and educational attainment. The results reveal that individuals with parents employed in a top job are 22.8 percentage points more likely to access a top job in adulthood than individuals with parents who are employed in a non top job. Childhood cognitive skills and later educational attainment are found to be particularly important contributors to this transmission of advantage, with childhood non cognitive skills also making a substantial contribution.
Posted Content
TL;DR: In this paper, the authors examined the extent to which firms pass back the cost of pollution regulation to workers in the form of lower wages using a unique matched employer-employee dataset for Shanghai.
Abstract: In this study we examine the extent to which firms pass back the cost of pollution regulation to workers in the form of lower wages using a unique matched employer-employee dataset for Shanghai. The benefits and costs of pollution regulation in China are important topics to study as China comes under increasing pressure to move from a single-minded focus on energy-driven economic growth to a more balanced approach to economic growth. The benefits of such a shift, particularly in terms of health, are relatively well-studied, but the costs are less so. The hip-pocket effect of pollution regulation on workers’ wages is particularly important given that it is likely to influence public support for a more balanced approach. Our main finding is that the reduction in average wages attributable to firms taking measures to control for pollution is between 13.8% and 18.8%, all things being equal.
Posted ContentDOI
TL;DR: In this article, the authors investigated the rate of returns to private investment in education in urban China, focusing on gender differences, and found that females have higher rates of return to schooling than males after taking account of sample selection bias and the endogeneity of schooling.
Abstract: This study investigates the rate of returns to private investment in education in urban China, focusing on gender differences. It shows that in general females have higher rates of returns to schooling than males after taking account of sample selection bias and the endogeneity of schooling, despite the fact that females usually have less schooling and lower income. However, the advances of females become less prominent after controlling for occupational choices. Furthermore, the sub samples of rural-to-urban migrant workers and urban-resident workers display different patterns: for urban residents, females have slightly higher rates of returns to schooling, while migrant workers show an opposite hierarchy of gender differences in returns to schooling, in the sense that males have higher returns to schooling than females.
01 Jan 2010
TL;DR: The authors present a panoramica comparativa de the evolucion in the ultimos anos in determinados paises latinoamericanos, cuestionando el alcance de la relación entre el Indice de Desarrollo Humano relativo al Genero (IDG) and the Indice of Potenciacion de Generos (IPG).
Abstract: La problematica de la igualdad de genero ha sido una constante en los estudios realizados por el PNUD sobre desarrollo humano. A tal efecto se han establecido una serie de indicadores que permiten evaluar su comportamiento. Este trabajo presenta una panoramica comparativa de su evolucion en los ultimos anos en determinados paises latinoamericanos, cuestionando el alcance de la relacion entre el Indice de Desarrollo Humano relativo al Genero (IDG) y el Indice de Potenciacion de Genero (IPG). A pesar de los logros obtenidos en materia de educacion, que equilibran la situacion de mujeres y hombres, persisten importantes diferencias en el grado de participacion socioeconomica femenina.