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How large are returns to schooling? Hint: Money isn't everything

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  • Philip Oreopoulos
  • Kjell G. Salvanes

Abstract

This paper explores the many avenues by which schooling affects lifetime well-being. Experiences and skills acquired in school reverberate throughout life, not just through higher earnings. Schooling also affects the degree one enjoys work and the likelihood of being unemployed. It leads individuals to make better decisions about health, marriage, and parenting. It also improves patience, making individuals more goal-oriented and less likely to engage in risky behavior. Schooling improves trust and social interaction, and may offer substantial consumption value to some students. We discuss various mechanisms to explain how these relationships may occur independent of wealth effects, and present evidence that non-pecuniary returns to schooling are at least as large as pecuniary ones. Ironically, one explanation why some early school leavers miss out on these high returns is that they lack the very same decision making skills that more schooling would help improve.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15339.

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Date of creation: Sep 2009
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Handle: RePEc:nbr:nberwo:15339

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. External returns to education
    by Kevin Denny in Geary Behaviour Centre on 2009-09-19 14:29:00
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Cited by:
  1. Peter H. Lindert, 2009. "Revealing Failures in the History of School Finance," NBER Working Papers 15491, National Bureau of Economic Research, Inc.
  2. Riddell, W. Craig & Song, Xueda, 2011. "The Impact of Education on Unemployment Incidence and Re-employment Success: Evidence from the U.S. Labour Market," IZA Discussion Papers 5572, Institute for the Study of Labor (IZA).
  3. Björklund, Anders & Salvanes, Kjell G., 2011. "Education and Family Background: Mechanisms and Policies," Handbook of the Economics of Education, Elsevier.
  4. Helmut Rainer & Ian Smith, 2012. "Education, Communication and Wellbeing: An Application to Sexual Satisfaction," Kyklos, Wiley Blackwell, vol. 65(4), pages 581-598, November.
  5. Jens Ludwig & Jeffrey R. Kling & Sendhil Mullainathan, 2011. "Mechanism Experiments and Policy Evaluations," NBER Working Papers 17062, National Bureau of Economic Research, Inc.
  6. David A. Weiner & Byron F. Lutz & Jens Ludwig, 2009. "The Effects of School Desegregation on Crime," NBER Working Papers 15380, National Bureau of Economic Research, Inc.
  7. Marcello Sartarelli, 2011. "Do Performance Targets Affect Behaviour? Evidence from Discontinuities in Test Scores in England," DoQSS Working Papers 11-02, Department of Quantitative Social Science - Institute of Education, University of London.

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