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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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TL;DR: This paper found that the average return to an additional year of full-time education for the UK men is somewhere around 5 1/2% to 6% even after correcting for the effects of measurement error.
81 citations
TL;DR: The authors discusses how social disadvantage affects the learning experiences of households with fewer economic resources, at each stage of the individuals' life-course, and on some of the "social" effects of such learning.
Abstract: This paper discusses how social disadvantage affects the learning experiences of households with fewer economic resources, at each stage of the individuals' life-course, and on some of the "social" effects of such learning. It argues that while education can be an escalator out of social disadvantage — leading to better job prospects for youths facing greater risks of poverty and reducing the prevalence of income poverty in adult age — educational failure can reinforce it: a significant minority of students in several OECD countries do not even complete compulsory education; students' test scores in lower secondary education are strongly shaped by family characteristics; and the expansion of university education has most often benefited households with better educated parents. Far from "equalising" opportunities, education can be a powerful driver of social selection. When returns to education increase over time, this may lead to greater inter-generational persistence of poverty and less equality of opportunities.
81 citations
TL;DR: A statistically significant, positive trend is found in the effects of college attendance across strata, with the largest effects ofCollege on first marriage among the more advantaged and the smallest-indeed, negative-effects among the least advantaged men and women.
Abstract: Educational expansion has led to greater diversity in the social backgrounds of college students. We ask how schooling interacts with this diversity to influence marriage formation among men and women. Relying on data from the 1979 National Longitudinal Survey of Youth (N = 3208), we use a propensity score approach to group men and women into social strata and multilevel event history models to test differences in the effects of college attendance across strata. We find a statistically significant, positive trend in the effects of college attendance across strata, with the largest effects of college on first marriage among the more advantaged and the smallest—indeed, negative—effects among the least advantaged men and women. These findings appear consistent with a mismatch in the marriage market between individuals’ education and their social backgrounds.
81 citations
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TL;DR: This paper argued that women and men often receive the same percentage increase in their wage rates with advances in schooling and that the marginal returns for women will tend to exceed those for men, especially in countries where women are much less educated.
Abstract: Women and men often receive the same percentage increase in their wage rates with advances in schooling Because these returns decline with more schooling, the marginal returns for women will tend to exceed those for men, especially in countries where women are much less educated The health and schooling of children are more closely related to their mother's education than father's More educated women work more hours in the market labor force, broadening the tax base and thereby potentially reducing tax distortions These three conditions, it is argued, justify the disproportionate allocation of public expenditures toward women's education
80 citations
TL;DR: This paper found that college-educated leaders perform about the same as or worse than leaders with less formal education, and that politicians with college degrees do not tend to govern over more prosperous nations, do not pass more bills, and are no less likely to be corrupt.
Abstract: Do people with more formal education make better political leaders? In this article we analyze cross-national data on random leadership transitions, data on close elections in the US Congress, and data on randomly audited municipalities in Brazil. Across a wide range of outcomes, we consistently find that college-educated leaders perform about the same as or worse than leaders with less formal education. Politicians with college degrees do not tend to govern over more prosperous nations, do not pass more bills, do not tend to do better at the polls, and are no less likely to be corrupt. These findings have important implications for how citizens evaluate candidates, how scholars measure leader quality, and how we think about the role of education in policy making.
80 citations