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The Returns to Academic and Vocational Qualifications in Britain

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Author Info
Dearden, Lorraine, et al

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Abstract

This paper uses data from the 1991 sweep of the National Child Development Study (NCDS) and the 1998 Labour Force Survey (LFS) to provide a comprehensive analysis of the labour market returns to academic and vocational qualifications. The results show that the wage premia from academic qualifications are typically higher than from vocational qualifications. However, this gap is reduced somewhat, when we control for the amount of time taken to acquire different qualifications. This is particularly important for vocational courses, which generally take shorter time periods to complete. In the paper we also investigate how returns vary by gender, subsequent qualifications, and the natural ability of individuals. Finally, by comparing the NCDS results with those from the LFS, we estimate the bias that can result from not controlling for factors such as ability, family background and measurement error. The results reveal that the estimated returns in the NCDS equations controlling for ability, family background and measurement error are similar to the simple OLS estimates obtained with the LFS, which do not control for these factors. This suggests that the biases generally offset one another. Copyright 2002 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

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Publisher Info
Article provided by Blackwell Publishing in its journal Bulletin of Economic Research.

Volume (Year): 54 (2002)
Issue (Month): 3 (July)
Pages: 249-74
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Handle: RePEc:bla:buecrs:v:54:y:2002:i:3:p:249-74

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Peter Robinson, 1997. "The Myth of Parity of Esteem: Earnings and Qualifications," CEP Discussion Papers dp0354, Centre for Economic Performance, LSE. [Downloadable!]
  2. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Blackwell Publishing, vol. 65(2), pages 261-94, April. [Downloadable!] (restricted)
  3. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Blackwell Publishing, vol. 64(4), pages 605-54, October. [Downloadable!] (restricted)
  4. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier. [Downloadable!] (restricted)
  5. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-86, December. [Downloadable!] (restricted)
  6. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September. [Downloadable!] (restricted)
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  7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
  8. Lorraine Dearden, 1999. "Qualifications and earnings in Britain: how reliable are conventional OLS estimates of the returns to education?," IFS Working Papers W99/07, Institute for Fiscal Studies. [Downloadable!]
  9. Stewart, Mark B, 1983. "On Least Squares Estimation When the Dependent Variable Is Grouped," Review of Economic Studies, Blackwell Publishing, vol. 50(4), pages 737-53, October. [Downloadable!] (restricted)
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  10. Neuman, Shoshana & Ziderman, Adrian, 1991. "Vocational schooling, occupational matching, and labor market earnings in Israel," Policy Research Working Paper Series 683, The World Bank. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Patrinos, Harry Anthony & Ridao-Cano, Cris & Sakellariou, Chris, 2006. "Estimating the returns to education : accounting for heterogeneity in ability," Policy Research Working Paper Series 4040, The World Bank. [Downloadable!]
  2. Colm Harmon & Vincent Hogan & Ian Walker, 2001. "Dispersion in the Economic Return to Schooling," Working Papers 200116, School Of Economics, University College Dublin. [Downloadable!]
    Other versions:
  3. Neil Rickman & Robert Witt, 2003. "The determinants of employee crime in the UK," Department of Economics Discussion Papers 0703, Department of Economics, University of Surrey. [Downloadable!]
    Other versions:
  4. O'Leary, Nigel C. & Sloane, Peter J., 2005. "The Changing Wage Return to an Undergraduate Education," IZA Discussion Papers 1549, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2003. "Evaluating the impact of education on earnings in the UK: Models, methods and results from the NCDS," IFS Working Papers W03/20, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
  6. Steve Machin & Anna Vignoles, 2005. "Education Policy in the UK," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 3(4), pages 64-74, 01. [Downloadable!]
  7. Steven McIntosh, 2004. "The Impact of Vocational Qualifications on the Labour Market Outcomes of Low-Achieving School-Leavers," CEP Discussion Papers dp0621, Centre for Economic Performance, LSE. [Downloadable!]
  8. Richard Layard & Steven McIntosh & Anna Vignoles, 2002. "Britains Record on Skills," CEE Discussion Papers 0023, Centre for the Economics of Education, LSE. [Downloadable!]
  9. Erich Battistin & Barbara Sianesi, 2006. "Misreported schooling and returns to education: evidence from the UK," CeMMAP working papers CWP07/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
  10. Peter Dolton & Oscar Marcenaro & Lucia Navarro, 2001. "The effective use of student time: A stochastic frontier production function case study," CEE Discussion Papers 0010, Centre for the Economics of Education, LSE. [Downloadable!]
    Other versions:
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