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Family and gender still matter: the heterogeneity of returns to education in Germany

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  • Schnabel, Reinhold
  • Schnabel, Isabel

Abstract

Using information on family background, we estimate returns to education, allowing for the heterogeneity of returns. In order to control for the unobserved heterogeneity shared by family members, we construct a siblings sample and employ family fixed-effects and family correlated random-effects models. Our main result is that family background still matters despite the substantial political efforts to equalize educational opportunities in Germany. Persons with less-educated parents earn lower wages, but have higher returns to education. This supports the view that persons from less-educated backgrounds still face higher marginal costs in the educational system. The same interplay between the wage level and marginal returns is found for the effect of gender and cohort. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 02-67.

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Date of creation: 2002
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Handle: RePEc:zbw:zewdip:537

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Keywords: Returns to education; siblings analysis; heterogeneity of returns;

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References

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  1. David Card, 1994. "Earnings, Schooling, and Ability Revisited," NBER Working Papers 4832, National Bureau of Economic Research, Inc.
  2. Orley Ashenfelter & Cecilia Rouse, 1998. "Income, Schooling, And Ability: Evidence From A New Sample Of Identical Twins," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 253-284, February.
  3. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
  4. Lauer, Charlotte & Steiner, Viktor, 2000. "Returns to education in West Germany: an empirical assessment," ZEW Discussion Papers 00-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Bernd Fitzenberger & Reinhold Schnabel & Gaby Wunderlich, 2004. "The gender gap in labor market participation and employment: A cohort analysis for West Germany," Journal of Population Economics, Springer, vol. 17(1), pages 83-116, February.
  6. Daron Acemoglu & Jorn-Steffen Pischke, 2001. "Changes in the wage structure, family income, and children's education," LSE Research Online Documents on Economics 2471, London School of Economics and Political Science, LSE Library.
  7. Ichino, Andrea & Winter-Ebmer, Rudolf, 1999. "Lower and upper bounds of returns to schooling: An exercise in IV estimation with different instruments," European Economic Review, Elsevier, vol. 43(4-6), pages 889-901, April.
  8. Katharine G. Abraham & Susan N. Houseman, 1993. "Earnings Inequality in Germany," Upjohn Working Papers and Journal Articles 94-24, W.E. Upjohn Institute for Employment Research.
  9. Altonji, Joseph G & Dunn, Thomas A, 1996. "The Effects of Family Characteristics on the Return to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 692-704, November.
  10. Reinhard Hujer & Bernd Fitzenberger & Reinhold Schnabel & Thomas E. MaCurdy, 2001. "Testing for uniform wage trends in West-Germany: A cohort analysis using quantile regressions for censored data," Empirical Economics, Springer, vol. 26(1), pages 41-86.
  11. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, June.
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Citations

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Cited by:
  1. Göggel, Kathrin, 2007. "Sinkende Bildungsrenditen durch Bildungsreformen? Evidenz aus Mikrozensus und SOEP," ZEW Discussion Papers 07-017, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Bettina Lamla, 2013. "Family background and the decision to provide for old age: a siblings approach," Empirica, Springer, vol. 40(3), pages 483-504, August.
  3. Krenz, Astrid, 2010. "La distinction reloaded: Returns to education, family background, cultural and social capital in Germany," Center for European, Governance and Economic Development Research Discussion Papers 108, University of Goettingen, Department of Economics.
  4. Astrid Krenz, 2008. "Theorie und Empirie über den Wirkungszusammenhang zwischen sozialer Herkunft, kulturellem und sozialem Kapital, Bildung und Einkommen in der Bundesrepublik Deutschland," SOEPpapers on Multidisciplinary Panel Data Research 128, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. Kathrin Göggel, 2007. "Sinkende Bildungsrenditen durch Bildungsreformen?: Evidenz aus Mikrozensus und SOEP," SOEPpapers on Multidisciplinary Panel Data Research 11, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Thomas Cornelissen & Uwe Jirjahn & Georgi Tsertsvadze, 2008. "Parental Background and Earnings: German Evidence on Direct and Indirect Relationship," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 228(5+6), pages 554-572, December.
  7. Lamla, Bettina, 2012. "Family background, informal networks and the decision to provide for old age: A siblings approach," MEA discussion paper series 12261, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  8. Anton L. Flossmann & Winfried Pohlmeier, 2006. "Casual Returns to Education: A Survey on Empirical Evidence for Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(1), pages 6-23, January.
  9. Krenz, Astrid, 2010. "La distinction reloaded: Returns to education, family background, cultural and social capital in Germany," Center for European, Governance and Economic Development Research Discussion Papers 108, University of Goettingen, Department of Economics.
  10. Bettina Lamla, 2012. "Family Background, Informal Networks and the Decision to Provide for Old Age: A Siblings Approach," SOEPpapers on Multidisciplinary Panel Data Research 466, DIW Berlin, The German Socio-Economic Panel (SOEP).

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