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The Long-Run Educational Cost of World War II: An Example of Local Average Treatment Effect Estimation

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  • Ichino, Andrea
  • Winter-Ebmer, Rudolf

Abstract

An important component of the long-run cost of a war is the loss of human capital, suffered by children of schooling age who receive less education because of the war. This paper shows that in the European countries involved in World War II, children who were ten years old during the conflict were significantly less likely to proceed into higher education. On the contrary, we find no effect for individuals in the same cohorts living in countries not involved in the war. Using data for Austria, Germany, Sweden and Switzerland, we estimate the cost of the war in terms of earning losses, suffered by those individuals who did not reach higher education because of the conflict and we calculate the implied loss of GDP for their countries. In order to identify this cost, we interpret our Instrumental Variable estimates as measures of the Local Average Treatment Effects (Angrist and Imbens, 1994) of education connected to our war instruments. Inasmuch as World War II has caused an increase of liquidity constraints for families with children of schooling age (e.g. the death of the father), our estimates may be considered as measures of the long lasting income losses that could be avoided in peaceful times by exogenously increasing the educational attainment of children in families, subject to constraints similar to those caused by the war (e.g. families with single mothers).

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1895.

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Date of creation: Jun 1998
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Handle: RePEc:cpr:ceprdp:1895

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Related research

Keywords: endogeneity; returns to schooling; self selection; Wage Determination;

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Cited by:
  1. Ichino, Andrea & Winter-Ebmer, Rudolf, 1998. "Lower and Upper Bounds of Returns to Schooling: An Exercise in IV estimation with Different Instruments," CEPR Discussion Papers 2007, C.E.P.R. Discussion Papers.
  2. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-60, September.
  3. Pereira, Pedro Telhado & Martins, Pedro Silva, 2002. "Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries," Discussion Papers 709, The Research Institute of the Finnish Economy.
  4. Aakvik, Arild & Salvanes, Kjell G & Vaage, Kjell, 2003. "Measuring Heterogeneity in the Returns to Education in Norway Using Educational Reforms," CEPR Discussion Papers 4088, C.E.P.R. Discussion Papers.
  5. de Walque, Damien, 2004. "The long-term legacy of the Khmer Rouge period in Cambodia," Policy Research Working Paper Series 3446, The World Bank.

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