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Earnings Returns to the British Education Expansion

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  • Paul J Devereux

    (University College Dublin)

  • Wen Fan

    (University College Dublin)

Abstract

We study the effects of the large expansion in British educational attainment that took place for cohorts born between 1970 and 1975. Using the Quarterly Labour Force Survey, we find that the expansion caused men to increase education by about a year on average and gain about 8% higher wages; women obtained a slightly greater increase in education and a similar increase in wages. Clearly, there was a sizeable gain from being born late enough to take advantage of the greater educational opportunities offered by the expansion. Treating the expansion as an exogenous increase in educational attainment, we obtain instrumental variables estimates of returns to schooling of about 6% for both men and women.

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File URL: http://www.ucd.ie/t4cms/WP11_11.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 201111.

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Length: 39 pages
Date of creation: 28 Jun 2011
Date of revision:
Handle: RePEc:ucn:wpaper:201111

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Keywords: return to education; higher education expansion;

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References

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  1. Jo Blanden & Stephen Machin, 2013. "Educational Inequality and The Expansion of UK Higher Education," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(5), pages 578-596, November.
  2. Arnaud Chevalier & Colm Harmon & Ian Walker & Yu Zhu, 2003. "Does education raise productivity, or just reflect it?," Working Papers 200304, School Of Economics, University College Dublin.
  3. Paul J Devereux & Robert A Hart, 2009. "Forced to be Rich? Returns to Compulsory Schooling in Britain," Working Papers 200924, School Of Economics, University College Dublin.
  4. Matt Dickson, 2013. "The Causal Effect of Education on Wages Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(4), pages 477-498, 08.
  5. Dickson, Matt & Smith, Sarah, 2011. "What determines the return to education: An extra year or a hurdle cleared?," Economics of Education Review, Elsevier, vol. 30(6), pages 1167-1176.
  6. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-86, December.
  7. Andrea Ichino & Rudolf Winter-Ebmer, 2004. "The Long-Run Educational Cost of World War II," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 57-86, January.
  8. Daniel A. Ackerberg & Paul J. Devereux, 2009. "Improved JIVE Estimators for Overidentified Linear Models with and without Heteroskedasticity," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 351-362, May.
  9. 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 W10/06, Institute for Fiscal Studies.
  10. Levin, Jesse & Plug, Erik J. S., 1999. "Instrumenting education and the returns to schooling in the Netherlands," Labour Economics, Elsevier, vol. 6(4), pages 521-534, November.
  11. Sebastian Galiani & Samuel Berlinski, 2005. "The Effect of a Large Expansion of Pre-Primary School Facilities on Preschool Attendance and Maternal Employment," Working Papers 77, Universidad de San Andres, Departamento de Economia, revised Aug 2005.
  12. Kelly Bedard & Elizabeth Dhuey, 2006. "The Persistence of Early Childhood Maturity: International Evidence of Long-Run Age Effects," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1437-1472, November.
  13. Paul J. Devereux & Robert A. Hart, 2006. "Real wage cyclicality of job stayers, within-company job movers, and between-company job movers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(1), pages 105-119, October.
  14. Haroon Chowdry & Claire Crawford & Lorraine Dearden & Alissa Goodman & Anna Vignoles, 2013. "Widening participation in higher education: analysis using linked administrative data," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(2), pages 431-457, 02.
  15. Brunello, Giorgio & Miniaci, Raffaele, 1999. "The economic returns to schooling for Italian men. An evaluation based on instrumental variables1," Labour Economics, Elsevier, vol. 6(4), pages 509-519, November.
  16. Giorgio Brunello, 2010. "The effects of cohort size on European earnings," Journal of Population Economics, Springer, vol. 23(1), pages 273-290, January.
  17. Jorn-Steffen Pischke & Till von Wachter, 2008. "Zero returns to compulsory schooling in Germany: evidence and interpretation," LSE Research Online Documents on Economics 19509, London School of Economics and Political Science, LSE Library.
  18. Uusitalo, R. & Conneely, K., 1998. "Estimating Heterogeneous Treatment Effects in the Becker Schooling Model," University of Helsinki, Department of Economics 435, Department of Economics.
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Citations

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Cited by:
  1. Manudeep Bhuller & Magne Mogstad & Kjell G. Salvanes, 2014. "Life Cycle Earnings, Education Premiums and Internal Rates of Return," NBER Working Papers 20250, National Bureau of Economic Research, Inc.
  2. Manudeep Bhuller & Magne Mogstad & Kjell G.Salvanes, 2011. "Life-cycle bias and the returns to schooling in current and lifetime earnings," Discussion Papers 666, Research Department of Statistics Norway.
  3. Harmon, Colm P., 2011. "Economic Returns to Education: What We Know, What We Don't Know, and Where We Are Going – Some Brief Pointers," IZA Policy Papers 29, Institute for the Study of Labor (IZA).
  4. Dickson, Matt & Smith, Sarah, 2011. "What determines the return to education: An extra year or a hurdle cleared?," Economics of Education Review, Elsevier, vol. 30(6), pages 1167-1176.
  5. Joanne Lindley & Stephen Machin, 2011. "Rising Wage Inequality and Postgraduate Education," CEP Discussion Papers dp1075, Centre for Economic Performance, LSE.
  6. Machin Stephen & Marie Olivier & Vujić Sunčica, 2012. "Youth Crime and Education Expansion," Research Memorandum 037, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  7. Wen Fan, 2011. "Estimating the Return to College in Britain Using Regression and Propensity Score Matching," Working Papers 201119, School Of Economics, University College Dublin.

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