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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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Dissertation•
23 Feb 2015
TL;DR: In this article, the authors evaluate the importance of wait unemployment in the U.S. labor market and propose an accounting framework to decompose mismatch unemployment into different components and analyze its behavior over the business cycle.
Abstract: Esta tesis consta de tres ensayos. En el primer ensayo, se evalua la importancia del desempleo de espera, en el cual se asume que una persona que ha perdido su empleo, preferira esperar una vacante que cumpla con sus habilidades, en lugar de tomar el primer empleo disponible. Usando un enfoque de ?diferencias en diferencias? por identificacion, se encuentra que el desempleo de espera es un componente significativo del desempleo en E.U. En el segundo ensayo (escrito en colaboraci?on con Thijs van Rens), se propone un marco conceptual para descomponer el desempleo estructural y se analiza el comportamiento de cada uno de sus componentes en el ciclo de negocio. En el tercer ensayo, se reevalua la evidencia empirica existente de la polarizacion del mercado en el mercado de trabajo de E.U. y se encuentra que la evidencia emp??rica existente esta sesgada. El principal factor que ha influido en los cambios en la estructura de ocupaci?on desde los 90s ha sido la prima educativa.
This thesis consists of three essays. In the first essay, I empirically evaluate the importance of wait unemployment. Instead of taking the next best job, a displaced worker has an incentive to stay unemployed and wait for a vacancy that matches his skills. Using a difference-in-difference approach for identification, I find that this mechanism is an important component of aggregate unemployment in the U.S.
labor market. In the second essay (co-authored with Thijs van Rens), we propose an accounting framework to decompose mismatch unemployment into different components and analyze its behavior over the business cycle. In the third essay, I reevaluate the evidence for job polarization in the U.S. labor market. I find that existing evidence is biased. What really mattered for changes in the occupation structure since the 1990s was the education-premium.
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Posted Content•
TL;DR: In this article, the authors show that the level of education provides less information than the occupation of workers in explaining changes in wages and employment, and that such a policy is not likely to alleviate the mismatch which to some extent exists between the competencies required by employers and the skills offered by workers and the unemployed.
Abstract: Increased international economic integration and skill-biased technological change are often regarded as the main drivers of the rising inequality in wages and employment witnessed in industrialized countries in recent decades as they are believed to emphasize differences between individuals in level of education. However, proponents of a task-based view of technological change and offshoring stress the evolving content of tasks as the major determinant of shifts in labour demand and argue that this does not necessarily imply a clear-cut match between the level of education and job opportunities. Belgian data from the Structure and Distribution of Earnings Survey for the period 1999-2004 suggest that the level of wages is significantly correlated with the level of education but wage growth is not. Occupation seems to explain a statistically significant part of the wage level as well as wage growth of workers. The analysis supports the view that the level of education provides less information than the occupation of workers in explaining changes in wages and employment. Overall, it appears that a policy that simply aims to increase the level of education of the active population is not warranted. In addition to the risk of over-education, such a policy is not likely to alleviate the mismatch which to some extent exists between the competencies required by employers and the competencies offered by workers and the unemployed.
01 Nov 2013
TL;DR: In this article, the authors investigate whether the Raskin program affects the expenditure of households in Indonesia, especially with respect to education and health expenditure, and they find that household and demographic characteristics play a significant role in education.
Abstract: This paper intends to investigate whether the Raskin program affects the expenditure of households in Indonesia, especially with respect to education and health expenditure. Using the cross-sectional data from the Indonesia Family Life Survey 4 and employing the propensity score matching method and the two stage least square method, the study finds that the Raskin program affects education expenditures, whereas there is no evidence that the program affects health expenditures of beneficiaries. The study also investigates the household and demographic characteristics as determinants of education and health expenditures. The paper finds that, in general, household and demographic characteristics play a significant role in education and health expenditures. Based on the estimated results the paper suggests that the government should keep implementing the program with some points. First, the government and Non-Government Organization (NGO) should enhance and monitor the targeting program. Second, the government could provide some programs that generate and create income, such as workplace, loans, or health insurance to the poor households. In addition, in order to avoid becoming a burden that the government supports, the government should sustain economic
01 Jan 2009
TL;DR: In this article, the authors identify the impact of math coursework on earnings using the differential timing of state-level increases in high school graduation requirements as a source of exogenous variation.
Abstract: Labor economists know that a year of schooling raises earnings but have little evidence on the impact of specific courses completed. I identify the impact of math coursework on earnings using the differential timing of state-level increases in high school graduation requirements as a source of exogenous variation. The increased requirements induced large increases in both the completed math coursework and earnings of blacks, particularly black males. Two-sample instrumental variable estimates suggest that each additional year of math raised blacks' earnings by 5-9%, accounting for a large fraction of the value of a year of schooling. Closer analysis suggests that much of this effect comes from black students who attend non-white schools and who will not attend college. The earnings impact of additional math coursework is robust to changes in empirical specification, is not driven by selection into the labor force, and persists when earnings are conditioned on educational attainment. The reforms close one fifth of the earnings gap between black and white males. Estimates for whites are similar to those of blacks but are much noisier due to the reforms' weaker impact on white students' coursework. These results suggest that math coursework is an important determinant of the labor market return to schooling, that simple minimum requirements largely benefit low-skilled students, and that more demanding requirements might be necessary to improve the outcomes of high-skilled students.
01 Jan 2011
TL;DR: In this article, the authors propose a method of disassembling a set of disassembly points, called DISSERTATION, which is based on disassemblage-of-dispersal.
Abstract: OF DISSERTATION