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Schooling and labor market impacts of a natural policy experiment

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  • Patrinos, Harry Anthony
  • Sakellariou, Chris

Abstract

The authors use a nationally representative household survey to estimate returns to schooling in Venezuela from instrumental variables based on a supply-side intervention in the education market. These estimates apply to a subgroup of liquidity-constrained individuals, in the spirit of the Local Average Treatment Effect (LATE) literature. Returns to schooling estimates which apply to a subgroup of individuals affected by the policy intervention may be more interesting from a policy perspective than the return to the"average"individual. The authors use an instrument based on the 1980 education reform (the Organic Law of Education) which provided for nine years of compulsory basic education. They also obtain alternative estimates using father's education as an instrument, in an attempt to derive high and low estimates of returns to schooling in Venezuela. The estimates are consistent with recent findings suggesting that the effect of education, at least for certain subgroups affected by a policy intervention, is as large, or larger than what is suggested by OLS estimates.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3460.

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Date of creation: 01 Nov 2004
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Handle: RePEc:wbk:wbrwps:3460

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Keywords: Curriculum&Instruction; Public Health Promotion; Health Monitoring&Evaluation; Teaching and Learning; Education Reform and Management; Gender and Education; Health Monitoring&Evaluation; Teaching and Learning; Curriculum&Instruction; Education Reform and Management;

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  1. Esther Duflo, 2001. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review, American Economic Association, American Economic Association, vol. 91(4), pages 795-813, September.
  2. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," United Kingdom Stata Users' Group Meetings 2003, Stata Users Group 02, Stata Users Group.
  3. Edward Vytlacil, 2002. "Independence, Monotonicity, and Latent Index Models: An Equivalence Result," Econometrica, Econometric Society, Econometric Society, vol. 70(1), pages 331-341, January.
  4. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects and Econometric Policy Evaluation," NBER Technical Working Papers 0306, National Bureau of Economic Research, Inc.
  5. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2004. "Evaluating the Impact of Education on Earnings in the UK: Models, Methods and Results from the NCDS," CEE Discussion Papers, Centre for the Economics of Education, LSE 0047, Centre for the Economics of Education, LSE.
  6. Joshua D. Angrist & Guido W. Imbens, 1995. "Average Causal Response with Variable Treatment Intensity," NBER Technical Working Papers 0127, National Bureau of Economic Research, Inc.
  7. Joshua Angrist & Alan B. Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," NBER Working Papers 8456, National Bureau of Economic Research, Inc.
  8. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, Econometric Society, vol. 50(4), pages 1029-54, July.
  9. Psacharopoulos, George & Patrinos, Harry Anthony, 2002. "Returns to investment in education : a further update," Policy Research Working Paper Series 2881, The World Bank.
  10. Thomas J. Kane & Cecilia Elena Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," NBER Working Papers 7235, National Bureau of Economic Research, Inc.
  11. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  12. Maluccio, John A., 1998. "Endogeneity of schooling in the wage function," FCND discussion papers, International Food Policy Research Institute (IFPRI) 54, International Food Policy Research Institute (IFPRI).
  13. repec:fth:prinin:455 is not listed on IDEAS
  14. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
  15. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, Econometric Society, vol. 69(5), pages 1127-60, September.
  16. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, Econometric Society, vol. 45(1), pages 1-22, January.
  17. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  18. Wu, De-Min, 1973. "Alternative Tests of Independence Between Stochastic Regressors and Disturbances," Econometrica, Econometric Society, Econometric Society, vol. 41(4), pages 733-50, July.
  19. James J. Heckman & Edward J. Vytlacil, 2000. "Local Instrumental Variables," NBER Technical Working Papers 0252, National Bureau of Economic Research, Inc.
  20. James Heckman, 1997. "Instrumental Variables: A Study of Implicit Behavioral Assumptions Used in Making Program Evaluations," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 441-462.
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Citations

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Cited by:
  1. Orazem, Peter & Glewwe, Paul & Patrinos, Harry, 2007. "The Benefits and Costs of Alternative Strategies to Improve Educational Outcomes," Staff General Research Papers 12853, Iowa State University, Department of Economics.
  2. Mayer-Foulkes, David, 2008. "The Human Development Trap in Mexico," World Development, Elsevier, Elsevier, vol. 36(5), pages 775-796, May.
  3. Patrinos, Harry A. & Sakellariou, Chris, 2011. "Quality of Schooling, Returns to Schooling and the 1981 Vouchers Reform in Chile," World Development, Elsevier, Elsevier, vol. 39(12), pages 2245-2256.
  4. World Bank, 2005. "Mexico : Determinants of Learning Policy Note," World Bank Other Operational Studies 8284, The World Bank.
  5. Ismail, Ramlee, 2007. "The Impact of Schooling Reform on Returns to Education in Malaysia," MPRA Paper 15021, University Library of Munich, Germany, revised 29 Jan 2008.
  6. Chuang, Yih-chyi & Lai, Wei-wen, 2010. "Heterogeneity, comparative advantage, and return to education: The case of Taiwan," Economics of Education Review, Elsevier, Elsevier, vol. 29(5), pages 804-812, October.
  7. Marito Garcia & Jean Fares, 2008. "Youth in Africa's Labor Market," World Bank Publications, The World Bank, number 6578, August.

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