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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.
Citations
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Journal ArticleDOI
TL;DR: In this article, the authors analyse causal effects of birth spacing on subsequent neonatal mortality and subsequent birth intervals, controlling for unobserved heterogeneity, and find evidence of frailty, fecundity, and causal effects in both directions.

117 citations

Journal ArticleDOI
TL;DR: This article examined the effects of college attendance and completion on fertility across a range of social backgrounds and levels of early achievement, and found that fertility-decreasing college effect is concentrated among women from comparatively disadvantaged social backgrounds.
Abstract: As college-going among women has increased, more women are going to college from backgrounds that previously would have precluded their attendance and completion. This affords us the opportunity and motivation to look at the effects of college on fertility across a range of social backgrounds and levels of early achievement. Despite a substantial literature on the effects of education on women’s fertility, researchers have not assessed variation in effects by selection into college. With data on U.S. women from the National Longitudinal Survey of Youth 1979, we examine effects of timely college attendance and completion on women’s fertility by the propensity to attend and complete college using multilevel Poisson and discrete-time event-history models. Disaggregating the effects of college by propensity score strata, we find that the fertility-decreasing college effect is concentrated among women from comparatively disadvantaged social backgrounds and low levels of early achievement. The effects of college on fertility attenuate as we observe women from backgrounds that are more predictive of college attendance and completion.

117 citations

Journal ArticleDOI
TL;DR: In this paper, the authors evaluate the long-term wage effects of an extra year of basic vocational education using a difference-in-differences approach and find no beneficial effect from the change.

116 citations

Journal ArticleDOI
TL;DR: This article investigated the relationship between cumulative high school grade point average (GPA), educational attainment, and labor market earnings among a sample of young adults (ages 24-34) using abstracted grades and other data from the National Longitudinal Survey of Adolescent Health.
Abstract: Using abstracted grades and other data from the National Longitudinal Survey of Adolescent Health, we investigate the relationships between cumulative high school grade point average (GPA), educational attainment, and labor market earnings among a sample of young adults (ages 24–34). We estimate several models with an extensive list of control variables and high school fixed effects. Results consistently show that high school GPA is a positive and statistically significant predictor of educational attainment and earnings in adulthood. Moreover, the coefficient estimates are large and economically important for each gender. Interesting and somewhat unexpected findings emerge for race in that, after controlling for innate ability, academic performance, and other economic and demographic variables, African Americans advance further in the formal educational system than their White counterparts. Various sensitivity tests support the stability of the core findings.

116 citations

Book ChapterDOI
TL;DR: In this paper, the authors present a review of the evidence along with providing an evaluation of the various controversial aspects including issues of causality, consumer behavior, and estimation approaches for public versus private provision and the financing of schools.
Abstract: Historically, most attention in public programs has been given to the resources devoted to the activity, and resources have been used to index both commitment and quality Education differs from other areas of public expenditure because direct measures of outcomes are available, making it is possible to consider results and, by implication, to consider the efficiency of provision Early interpretations of the evidence, emanating from popular interpretations of the Coleman Report that “schools do not make a difference”, are incorrect, but the basic evidence behind the statement suggests serious performance problems of government supply, because purchased inputs to schools are not closely related to outcomes This paper reviews that evidence along with providing an evaluation of the various controversial aspects including issues of causality, consumer behavior, and estimation approaches Two detailed policy areas are discussed in terms of the evidence on performance: public versus private provision and the financing of schools

115 citations