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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. Chowdry, Haroon & Crawford, Claire & Dearden, Lorraine & Goodman, Alissa & Vignoles, Anna, 2010. "Widening Participation in Higher Education: Analysis Using Linked Administrative Data," IZA Discussion Papers 4991, Institute for the Study of Labor (IZA).
  2. Paul J. Devereux & Robert A. Hart, 2009. "Forced to be Rich? Returns to Compulsory Schooling in Britain," Working Papers 200940, Geary Institute, University College Dublin.
  3. Dickson, Matt & Smith, Sarah, 2011. "What Determines the Return to Education: An Extra Year or a Hurdle Cleared?," IZA Discussion Papers 5524, Institute for the Study of Labor (IZA).
  4. Devereux, Paul J. & Hart, Robert A., 2005. "Real Wage Cyclicality of Job Stayers, Within-Company Job Movers, and Between-Company Job Movers," IZA Discussion Papers 1651, Institute for the Study of Labor (IZA).
  5. 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.
  6. Chevalier, Arnaud & Harmon, Colm & Walker, Ian & Zhu, Yu, 2003. "Does Education Raise Productivity or Just Reflect It?," CEPR Discussion Papers 3993, C.E.P.R. Discussion Papers.
  7. 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.
  8. Uusitalo, R. & Conneely, K., 1998. "Estimating Heterogeneous Treatment Effects in the Becker Schooling Model," University of Helsinki, Department of Economics 435, Department of Economics.
  9. 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.
  10. 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.
  11. Claire Crawford & Lorraine Dearden & Costas Meghir, 2010. "When you are born matters: the impact of date of birth on educational outcomes in England," DoQSS Working Papers 10-09, Department of Quantitative Social Science - Institute of Education, University of London.
  12. 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.
  13. 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.
  14. Dickson, Matt, 2009. "The Causal Effect of Education on Wages Revisited," IZA Discussion Papers 4419, Institute for the Study of Labor (IZA).
  15. 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.
  16. 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.
  17. Giorgio Brunello, 2007. "The Effects of Cohort Size on European Earnings," "Marco Fanno" Working Papers 0036, Dipartimento di Scienze Economiche "Marco Fanno".
  18. 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.
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Cited by:
  1. Stephen Machin & Olivier Marie & Sunčica Vujić, 2012. "Youth Crime and Education Expansion," German Economic Review, Verein für Socialpolitik, vol. 13(4), pages 366-384, November.
  2. Lindley, Joanne & Machin, Stephen, 2011. "Rising Wage Inequality and Postgraduate Education," IZA Discussion Papers 5981, Institute for the Study of Labor (IZA).
  3. 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.
  4. Dickson, Matt & Smith, Sarah, 2011. "What Determines the Return to Education: An Extra Year or a Hurdle Cleared?," IZA Discussion Papers 5524, Institute for the Study of Labor (IZA).
  5. Colm Harmon, 2011. "Economic Returns to Education: What We Know, What We Don’t Know, and Where We Are Going – Some Brief Pointers," Working Papers 201115, Geary Institute, University College Dublin.
  6. 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.
  7. Bhuller, Manudeep & Mogstad, Magne & Salvanes, Kjell G., 2011. "Life-Cycle Bias and the Returns to Schooling in Current and Lifetime Earnings," IZA Discussion Papers 5788, Institute for the Study of Labor (IZA).

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