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Educational Expansion and Its Heterogeneous Returns for Wage Workers

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  • Michael Gebel
  • Friedhelm Pfeiffer

Abstract

This paper examines the evolution of returns to education in the West German labour market over the last two decades. During this period, graduates from the period of educational expansion entered the labour market and an upgrading of the skill structure took place. In order to tackle the issues of endogeneity of schooling and its heterogeneous returns, we apply two estimation methods: Wooldridge’s (2004) approach that relies on conditional mean independence and Garen’s (1984) control function approach that requires an exclusion restriction. For the population of wage workers from the SOEP, we find that both approaches produce estimates of average returns to education that decrease until the late 1990s and increase afterwards. The gender gap in returns to education seems to vanish. Furthermore, we find that the so-called “baby boomer” cohort has the lowest average return to education in early working life. However, this effect disappears when the “baby-boomer” cohort grows older.

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File URL: http://dx.doi.org/10.3790/schm.130.1.19
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Bibliographic Info

Article provided by Duncker & Humblot, Berlin in its journal Schmollers Jahrbuch.

Volume (Year): 130 (2010)
Issue (Month): 1 ()
Pages: 19-42

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Handle: RePEc:aeq:aeqsjb:v130_y2010_i1_q1_p19-42

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References

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  1. Johannes Gernandt & Friedhelm Pfeiffer, 2007. "Rising Wage Inequality in Germany," SOEPpapers on Multidisciplinary Panel Data Research 14, DIW Berlin, The German Socio-Economic Panel (SOEP).
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  14. Johannes Gernandt & Friedhelm Pfeiffer, 2006. "Einstiegslöhne bei unvollkommenen Arbeitsmärkten," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(2), pages 147-172, 05.
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Citations

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Cited by:
  1. Laucht, Manfred & Coneus, Katja & Blomeyer, Dorothea & Pfeiffer, Friedhelm, 2008. "Initial Risk Matrix, Home Resources, Ability Development and Children's Achievement," ZEW Discussion Papers 08-100, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Regina T. Riphahn & Martina Eschelbach & Guido Heineck & Steffen Müller, 2010. "Kosten und Nutzen der Ausbildung an Tertiärbildungsinstitutionen im Vergleich," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 11(2), pages 103-131, 05.
  3. Pfeiffer, Friedhelm & Reuß, Karsten, 2007. "Age-dependent Skill Formation and Returns to Education," ZEW Discussion Papers 07-015, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Thomas Cornelissen & Uwe Jirjahn & Georgi Tsertsvadze, 2008. "Parental Background and Earnings: German Evidence on Direct and Indirect Relationship," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 228(5+6), pages 554-572, December.
  5. Stephan O. Hornig & Horst Rottmann & Rüdiger Wapler, 2009. "Information Asymmetry, Education Signals and the Case of Ethnic and Native Germans," CESifo Working Paper Series 2683, CESifo Group Munich.
  6. Lorenzo Rocco & Giorgio Brunello & Elena Crivellaro, 2011. "Lost in Transition? The returns to education acquired under communism 15 years after the fall of the Berlin Wall," Working Papers 17, AlmaLaurea Inter-University Consortium.
  7. Blomeyer, Dorothea & Coneus, Katja & Laucht, Manfred & Pfeiffer, Friedhelm, 2008. "Self-Productivity and Complementarities in Human Development: Evidence from the Mannheim Study of Children at Risk," IZA Discussion Papers 3734, Institute for the Study of Labor (IZA).
  8. Pfeiffer, Friedhelm & Pohlmeier, Winfried, 2012. "Causal Returns to Schooling and Individual Heterogeneity," IZA Discussion Papers 6588, Institute for the Study of Labor (IZA).
  9. Giulio Bosio & Chiara Noè, 2011. "Higher Education Expansion, Human Capital Externalities and Wages: Italian Evidence within Occupation," Working Papers 39, AlmaLaurea Inter-University Consortium.
  10. Daniel Kemptner & Jan Marcus, 2011. "Spillover Effects of Maternal Education on Child's Health and Schooling," SOEPpapers on Multidisciplinary Panel Data Research 375, DIW Berlin, The German Socio-Economic Panel (SOEP).

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