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Firm-Level Social Returns to Education

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  • Martins, Pedro S.

    ()
    (Queen Mary, University of London)

Abstract

Do workers benefit from the education of their co-workers? This question is examined first by introducing a model of on-the-job schooling, which argues that educated workers may transfer part of their general skills to uneducated workers and that this spillover is affected by the degrees of non-excludability, irreversibility and generality of those skills. We then conduct an empirical analysis drawing on a matched panel of Portuguese firms and their workers. Schooling endogeneity is tackled by considering firm fixed effects and instruments based on schooling lags and the lagged share of retirement-age workers. We find evidence of large firm-level social returns (ranging between 14% and 23% – and thus exceeding standard estimates of private returns) and of significant returns accruing to less educated workers but not to their more educated colleagues.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1382.

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Length: 47 pages
Date of creation: Nov 2004
Date of revision:
Publication status: published in: Journal of Population Economics, 2010, 23(2), 539-558
Handle: RePEc:iza:izadps:dp1382

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Keywords: wages; endogenous growth; matched employer-employee data; education; spillovers;

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References

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Citations

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Cited by:
  1. Destré, Guillaume & Lévy-Garboua, Louis & Sollogoub, Michel, 2008. "Learning from experience or learning from others?: Inferring informal training from a human capital earnings function with matched employer-employee data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 37(3), pages 919-938, June.
  2. Uschi Backes-Gellner & Christian Rupietta & Simone N. Tuor, 2011. "Educational Spillovers at the Firm Level: Who Benefits from Whom?," Economics of Education Working Paper Series, University of Zurich, Institute for Strategy and Business Economics (ISU) 0065, University of Zurich, Institute for Strategy and Business Economics (ISU).
  3. Nils Braakmann, 2010. "Fields of Training, Plant Characteristics and the Gender Wage Gap in Entry Wages Among Skilled Workers - Evidence from German Administrative Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 230(1), pages 27-41, February.
  4. Munch, Jakob Roland & Skaksen, Jan Rose, 2008. "Human capital and wages in exporting firms," Journal of International Economics, Elsevier, Elsevier, vol. 75(2), pages 363-372, July.
  5. De Fraja, Gianni, 2006. "Market and Public Provision in the Presence of Human Capital Externalities," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5471, C.E.P.R. Discussion Papers.
  6. Luca David Opromolla, 2013. "Trade and wage inequality," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department, Banco de Portugal, Economics and Research Department.
  7. Pedro Portugal, 2004. "Myths and Facts Regarding the Portuguese Labour Market - the Tragic Fate of College Graduates," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department, Banco de Portugal, Economics and Research Department.
  8. Rasmus Thönnessen & Erich Gundlach, 2013. "The size of human capital externalities: cross-country evidence," Public Choice, Springer, Springer, vol. 157(3), pages 671-689, December.
  9. Yeo Khee Yong & Toh Mun Heng & Shandre Mugan Thangavelu & James Wong, 2007. "Premium on Fields of Study : The Returns to Higher Education in Singapore," Microeconomics Working Papers 21921, East Asian Bureau of Economic Research.
  10. Kuckulenz, Anja, 2006. "Wage and Productivity Effect of Continuing Training in Germany: A Sectoral Analysis," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 06-25, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Pedro Martins & Francisco Lima, 2006. "External recruitments and firm performance," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(14), pages 911-915.
  12. Floreani, Vincent Arthur, 2014. "Fixing Europe's youth unemployment and skills mismatch, can public financial support to SMEs be effective? The case of the European Commission and European Investment Bank joint initiatives," MPRA Paper 55849, University Library of Munich, Germany.
  13. Bratti, Massimiliano & Leombruni, Roberto, 2009. "Local Human Capital Externalities and Wages at the Firm Level: The Case of Italian Manufacturing," IZA Discussion Papers 4613, Institute for the Study of Labor (IZA).
  14. Michael Landesmann & Sebastian Leitner & Robert Stehrer & Terry Ward, 2009. "Skills and Industrial Competitiveness," wiiw Research Reports 356, The Vienna Institute for International Economic Studies, wiiw.
  15. Anja Kuckulenz, 2006. "Wage and Productivity Effect of Continuing Training in Germany : A Sectoral Analysis," Working Papers of the Research Group Heterogenous Labor, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim 06-06, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
  16. Yeo Khee Yong & Toh Mun Heng & Shandre Mugan Thangavelu & James Wong, 2007. "Premium on Fields of Study: The Returns to Higher Education in Singapore," SCAPE Policy Research Working Paper Series, National University of Singapore, Department of Economics, SCAPE 0703, National University of Singapore, Department of Economics, SCAPE.
  17. Simone N. Tuor Sartore & Uschi Backes-Gellner, 2012. "Another Effect of Group Diversity: Educational Composition and Workers’ Pay," Economics of Education Working Paper Series, University of Zurich, Institute for Strategy and Business Economics (ISU) 0078, University of Zurich, Institute for Strategy and Business Economics (ISU).
  18. Véronique Gille, 2012. "Education spillovers: empirical evidence in rural India," Indian Growth and Development Review, Emerald Group Publishing, Emerald Group Publishing, vol. 5(1), pages 4-24, April.

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