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Forced to Be Rich? Returns to Compulsory Schooling in Britain

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  • Devereux, Paul J.

    ()
    (University College Dublin)

  • Hart, Robert A.

    ()
    (University of Stirling)

Abstract

Do students benefit from compulsory schooling? Researchers using changes in compulsory schooling laws as instruments have typically estimated very high returns to additional schooling that are greater than the corresponding OLS estimates and concluded that the group of individuals who are influenced by the law change have particularly high returns to education. That is, the Local Average Treatment Effect (LATE) is larger than the average treatment effect (ATE). However, studies of a 1947 British compulsory schooling law change that impacted about half the relevant population have also found very high instrumental variables returns to schooling (about 15%), suggesting that the ATE of schooling is also very high and higher than OLS estimates suggest. We utilize the New Earnings Survey Panel Data-set (NESPD), that has superior earnings information compared to the datasets previously used and find instrumental variable estimates that are small and much lower than OLS. In fact, there is no evidence of any positive return for women and the return for men is in the 4-7% range. These estimates provide no evidence that the ATE of schooling is very high.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3305.

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Length: 35 pages
Date of creation: Jan 2008
Date of revision:
Publication status: published in: Economic Journal, 2010, 120(549), 1345-1364
Handle: RePEc:iza:izadps:dp3305

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Keywords: compulsory schooling; return to education;

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References

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  1. Damon Clark & Heather Royer, 2010. "The Effect of Education on Adult Health and Mortality: Evidence from Britain," NBER Working Papers 16013, National Bureau of Economic Research, Inc.
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  6. Paul J. Devereux & Robert A. Hart, 2010. "Forced to be Rich? Returns to Compulsory Schooling in Britain," Economic Journal, Royal Economic Society, vol. 120(549), pages 1345-1364, December.
  7. Atsushi Inoue & Gary Solon, 2010. "Two-Sample Instrumental Variables Estimators," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 557-561, August.
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  12. Pischke, Jörn-Steffen & Wachter, Till von, 2005. "Zero Returns to Compulsory Schooling in Germany: Evidence and Interpretation," IZA Discussion Papers 1645, Institute for the Study of Labor (IZA).
  13. Lance Lochner & Enrico Moretti, 2001. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," NBER Working Papers 8605, National Bureau of Economic Research, Inc.
  14. Costas Meghir & Mårten Palme, 2005. "Educational Reform, Ability, and Family Background," American Economic Review, American Economic Association, vol. 95(1), pages 414-424, March.
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  16. Julien Grenet, 2013. "Is Extending Compulsory Schooling Alone Enough to Raise Earnings? Evidence from French and British Compulsory Schooling Laws," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(1), pages 176-210, 01.
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  26. repec:dgr:uvatin:2006109 is not listed on IDEAS
  27. Oreopoulos, Philip, 2007. "Do dropouts drop out too soon? Wealth, health and happiness from compulsory schooling," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2213-2229, December.
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  1. Does compulsory education pay?
    by chris dillow in Stumbling and Mumbling on 2008-02-05 14:49:01
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