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How Would One Extra Year of High School Affect Wages? Evidence from a Unique Policy Change

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Author Info

  • Krashinsky, Harry

Abstract

This paper uses a unique policy change in Canada’s most populous province, Ontario, to provide direct evidence on the effect of reducing the length of high school on labour market outcomes for high school graduates. In 1999, the Ontario government eliminated the fifth year of education from its high schools, and mandated a new four-year program. This policy change created two cohorts of students who graduated from high school together with different amounts of education, thus making it possible to identify the effect of one extra year of high school education on earnings. Using restricted survey data, the results demonstrate that students who receive one less year of high school education receive wages that are approximately ten percent lower than their counterparts one year after graduation, and these effects persist two years after graduation. Using birth year to instrument for educational attainment produces estimates that are even higher than the cross-sectional findings, but quite consistent with the existing literature on the return to education. These results are a significant contribution to the literature on the return to education because unlike prior changes to the educational system, this change in schooling laws results in two cohorts entering the labour market simultaneously. As such, business cycle effects do not confound the results.

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File URL: http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%2020%20-%20Krashinsky.pdf
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Bibliographic Info

Paper provided by Vancouver School of Economics in its series CLSSRN working papers with number clsrn_admin-2009-29.

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Length: 31 pages
Date of creation: 22 Apr 2009
Date of revision: 22 Apr 2009
Handle: RePEc:ubc:clssrn:clsrn_admin-2009-29

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Web page: http://www.clsrn.econ.ubc.ca/

Related research

Keywords: Human Capital; Returns to Education; Years of Schooling; Ontario Double Cohort;

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References

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  1. Bound, John & Solon, Gary, 1999. "Double trouble: on the value of twins-based estimation of the return to schooling," Economics of Education Review, Elsevier, vol. 18(2), pages 169-182, April.
  2. David Card & Thomas Lemieux, 2000. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," NBER Working Papers 7655, National Bureau of Economic Research, Inc.
  3. Joseph G. Altonji, 1995. "The Effects of High School Curriculum on Education and Labor Market Outcomes," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 409-438.
  4. Thomas J. Kane & Cecilia E. Rouse, 1993. "Labor Market Returns to Two- and Four-Year Colleges: Is a Credit a Credit and Do Degrees Matter?," NBER Working Papers 4268, National Bureau of Economic Research, Inc.
  5. Joshua D. Angrist, 2004. "Treatment effect heterogeneity in theory and practice," Economic Journal, Royal Economic Society, vol. 114(494), pages C52-C83, 03.
  6. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
  7. Lorraine Dearden & Javier Ferri & Costas Meghir, 2000. "The effect of school quality on educational attainment and wages," IFS Working Papers W00/22, Institute for Fiscal Studies.
  8. Ethel B. Jones & John D. Jackson, 1990. "College Grades and Labor Market Rewards," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 253-266.
  9. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, vol. 84(5), pages 1157-73, December.
  10. Jeff Grogger & Eric Eide, 1995. "Changes in College Skills and the Rise in the College Wage Premium," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 280-310.
  11. Harry A. Krashinsky, 2004. "Do Marital Status and Computer Usage Really Change the Wage Structure?," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
  12. repec:fth:prinin:311 is not listed on IDEAS
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Cited by:
  1. Meyer, Tobias & Thomsen, Stephan L., 2012. "How Important is Secondary School Duration for Post-school Education Decisions? Evidence from a Natural Experiment," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover dp-509, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.

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