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Estimating the education-earnings equation using geographic variation

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  • Doyle, William R.
  • Skinner, Benjamin T.

Abstract

We expand on the literature on the causal impact of postsecondary education on earnings by introducing a richer set of location-based measures as instruments for years of education. Utilizing data from the National Longitudinal Study of Youth, 1997, we implement six different sets of instruments based on geographic variation: presence of a four-year or two-year college in the county, inverse log distance to in-state two-year colleges, distance-weighted tuition and distance-weighted enrollment at in-state two-year colleges, and inverse log distance to all colleges. We find that these alternative measures yield differing estimates of the impact of educational attainment on earnings. Using our preferred measure of geographic variation, one additional year of postsecondary attainment results in a 9.7% increase in yearly earnings. We find a larger impact of postsecondary attainment for women, and no measurable impact of postsecondary attainment for men.

Suggested Citation

  • Doyle, William R. & Skinner, Benjamin T., 2016. "Estimating the education-earnings equation using geographic variation," Economics of Education Review, Elsevier, vol. 53(C), pages 254-267.
    • Handle: RePEc:eee:ecoedu:v:53:y:2016:i:c:p:254-267
    DOI: 10.1016/j.econedurev.2016.03.010
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    6. David Salomón Aké-Uitz, 2023. "Did the expansion of educational supply at higher education promote intergenerational social mobility in Mexico?/¿La expansión de la oferta educativa en la educación superior promovió la movilidad," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 38(1), pages 103-142.
    7. Baird Matthew D. & Zaber Melanie A. & Bozick Robert, 2022. "Beyond traditional academic degrees: The labor market returns to occupational credentials in the United States," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-38, January.
    8. Chen, Qihui, 2020. "Am I Late for School? Peer Effects on Delayed School Entry in Rural Northwestern China," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304415, Agricultural and Applied Economics Association.

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