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Education Policy Reform and the Return to Schooling from Instrumental Variables

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Author Info
Kevin J Denny (University College Dublin)
Colm P Harmon (University College Dublin)

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Abstract

This paper exploits an unusual policy reform that had the effect of reducing the direct cost of schooling in Ireland in the late 1960’s. This gave rise to an increased level of schooling but with effects that vary substantially across family background. This interaction of educational reform and family background generates a set of instrumental variables that are used to estimate the return to schooling allowing for the endogeneity of schooling. Using a standard Mincer type model we find a large and well-determined rate of return of around 12% which are substantially higher than the OLS estimates of around 7%.

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File URL: http://www.ucd.ie/economics/research/papers/2000/WP00.12.pdf
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File Function: First version, 2000
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Publisher Info
Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 200012.

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Length: 15 pages
Date of creation: 10 Jun 2000
Date of revision:
Handle: RePEc:ucn:wpaper:200012

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Kevin Denny & Colm Harmon & Dorren McMahon & Sandra Redmond, 1999. "Literacy and Education in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 30(3), pages 215-226. [Downloadable!]
  2. Angrist, Joshua D & Krueger, Alan B, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 979-1014, November. [Downloadable!] (restricted)
    Other versions:
  3. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 2000. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," NBER Working Papers 7457, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. repec:fth:prinin:415 is not listed on IDEAS
  5. Harmon, C & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
  6. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May. [Downloadable!] (restricted)
  7. Costas Meghir & Mårten Palme, 1999. "Assessing the effect of schooling on earnings using a social experiment," IFS Working Papers W99/10, Institute for Fiscal Studies. [Downloadable!]
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  8. Colm Harmon; & Ian Walker, 1995. "Estimates of Economic Return to Schooling in the UK," Economics, Finance and Accounting Department Working Paper Series n540195, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  9. Kevin Denny & Colm Harmon & Sandra Redmond, 2000. "Functional literacy, educational attainment and earnings - evidence from the international adult literacy survey," IFS Working Papers W00/09, Institute for Fiscal Studies. [Downloadable!]
  10. Uusitalo, R. & Conneely, K., 1998. "Estimating Heterogeneous Treatment Effects in the Becker Schooling Model," University of Helsinki, Department of Economics 435, Department of Economics.
  11. repec:fth:prinin:425 is not listed on IDEAS
  12. Henry S. Farber & Jeffrey R. Kling & Alan Krueger, 1999. "Interpreting Instrumental Variables Estimates of the Returns to Schooling," Working Papers 794, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  13. Callan, Tim & Wren, Anne, 1994. "Male-Female Wage Differentials: Analysis and Policy Issues," Research Series, Economic and Social Research Institute (ESRI), number GRS163.
  14. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," NBER Working Papers 4483, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Callan, Tim & Harmon, Colm, 1999. "The economic return to schooling in Ireland," Labour Economics, Elsevier, vol. 6(4), pages 543-550, November. [Downloadable!] (restricted)
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  16. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Chris Sakellariou, 2006. "Education policy reform, local average treatment effect and returns to schooling from instrumental variables in the Philippines," Applied Economics, Taylor and Francis Journals, vol. 38(4), pages 473-481, March. [Downloadable!] (restricted)
  2. Andrea Mercatanti, 2008. "A likelihood-based analysis for relaxing the exclusion restriction in randomized experiments with imperfect compliance," Temi di discussione (Economic working papers) 683, Bank of Italy, Economic Research Department. [Downloadable!]
  3. Concetta, MENDOLICCHIO, 2006. "A Disaggregate Analysis of Private Returns to Education in Italy," Discussion Papers (ECON - Département des Sciences Economiques) 2006054, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
  4. McGuinness Seamus, 2003. "University Quality and Labour Market Outcomes," Working Papers NIERC. 78, Economic Research Institute of Northern Ireland. [Downloadable!]
    Other versions:
  5. Giorgio Brunello & Margherita Fort & Guglielmo Weber, 2007. ""For One More Year with You": Changes in Compulsory Schooling, Education and the Distribution of Wages in Europe," IZA Discussion Papers 3102, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Shandre Thangavelu & Hu Guangzhou, 2006. "Lessons from “Benchmark” Countries: Korea & Ireland," SCAPE Policy Research Working Paper Series 0614, National University of Singapore, Department of Economics, SCAPE. [Downloadable!]
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