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What Determines the Return to Education: An Extra Year or a Hurdle Cleared?

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  • Dickson, Matt

    ()
    (University of Bath)

  • Smith, Sarah

    ()
    (University of Bristol)

Abstract

The 1973 Raising of the School Leaving Age in England and Wales has been used to identify returns to years’ schooling. However, the reform affected the proportion with qualifications, as well as schooling length. To shed light on whether the returns reflect extra schooling or qualifications, we exploit another institutional rule – the Easter Leaving Rule – to obtain unbiased estimates of the effect of qualifications. We find sizeable returns to academic qualifications – increasing the probability of employment by 40 percentage points. This is more than 70% of the estimated return based on RoSLA, suggesting that qualifications drive most – but not all – of the returns to education.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5524.

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Length: 26 pages
Date of creation: Feb 2011
Date of revision:
Publication status: published in: Economics of Education Review, 2011, 30 (6), 1167-1176
Handle: RePEc:iza:izadps:dp5524

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Keywords: qualifications; returns to education; RoSLA;

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References

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  1. Emilia Del Bono & Fernando Galindo-Rueda, 2007. "The Long Term Impacts of Compulsory Schooling: Evidence from a Natural Experiment in School Leaving Dates," CEE Discussion Papers, Centre for the Economics of Education, LSE 0074, Centre for the Economics of Education, LSE.
  2. Devereux, Paul J. & Hart, Robert A, 2008. "Forced to be Rich? Returns to Compulsory Schooling in Britain," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6679, C.E.P.R. Discussion Papers.
  3. Arnaud Chevalier & Colm Harmon & Ian Walker & Yu Zhu, 2004. "Does Education Raise Productivity, or Just Reflect it?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(499), pages F499-F517, November.
  4. Del Bono, Emilia & Galindo-Rueda, Fernando, 2004. "Do a Few Months of Compulsory Schooling Matter? The Education and Labour Market Impact of School Leaving Rules," IZA Discussion Papers, Institute for the Study of Labor (IZA) 1233, Institute for the Study of Labor (IZA).
  5. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2004. "Evaluating the impact of education on earnings in the UK: models, methods and results from the NCDS," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 19451, London School of Economics and Political Science, LSE Library.
  6. Devereux, Paul J. & Fan, Wen, 2011. "Earnings returns to the British education expansion," Economics of Education Review, Elsevier, Elsevier, vol. 30(6), pages 1153-1166.
  7. Harmon, C & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers, Institute for Fiscal Studies W95/12, Institute for Fiscal Studies.
  8. Damon Clark & Heather Royer, 2010. "The Effect of Education on Adult Health and Mortality: Evidence from Britain," NBER Working Papers, National Bureau of Economic Research, Inc 16013, National Bureau of Economic Research, Inc.
  9. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2011. "Too Young to Leave the Nest? The Effects of School Starting Age," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 93(2), pages 455-467, May.
  10. 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, Wiley Blackwell, vol. 115(1), pages 176-210, 01.
  11. Claire Crawford & Lorraine Dearden & Costas Meghir, 2010. "When you are born matters: the impact of date of birth on educational outcomes in England," IFS Working Papers, Institute for Fiscal Studies W10/06, Institute for Fiscal Studies.
  12. Silles, Mary A., 2009. "The causal effect of education on health: Evidence from the United Kingdom," Economics of Education Review, Elsevier, Elsevier, vol. 28(1), pages 122-128, February.
  13. Lorraine Dearden, 1999. "Qualifications and earnings in Britain: how reliable are conventional OLS estimates of the returns to education?," IFS Working Papers, Institute for Fiscal Studies W99/07, Institute for Fiscal Studies.
  14. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2005. "Evaluating the effect of education on earnings: models, methods and results from the National Child Development Survey," Journal of the Royal Statistical Society Series A, Royal Statistical Society, Royal Statistical Society, vol. 168(3), pages 473-512.
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Citations

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Cited by:
  1. Dickson, Matt & Gregg, Paul & Robinson, Harriet, 2013. "Early, Late or Never? When Does Parental Education Impact Child Outcomes?," IZA Discussion Papers, Institute for the Study of Labor (IZA) 7123, Institute for the Study of Labor (IZA).
  2. Hart, Robert A & Moro, Mirko & Roberts, J Elizabeth, 2012. "Date of birth, family background, and the 11 plus exam: short- and long-term consequences of the 1944 secondary education reforms in England and W ales," Stirling Economics Discussion Papers, University of Stirling, Division of Economics 2012-10, University of Stirling, Division of Economics.
  3. Paul J Devereux & Wen Fan, 2011. "Earnings Returns to the British Education Expansion," Working Papers, School Of Economics, University College Dublin 201111, School Of Economics, University College Dublin.
  4. Dickson, Matt & Harmon, Colm, 2011. "Economic returns to education: What We Know, What We Don’t Know, and Where We Are Going—Some brief pointers," Economics of Education Review, Elsevier, Elsevier, vol. 30(6), pages 1118-1122.

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