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Economic Returns to Education in France: OLS and Instrumental Variable Estimations

Author

Listed:
  • Sajjad Haider Bhatti

    (Institut de Recherche sur l’Éducation: Sociologie et Économie de l’Éducation (IREDU), Université de Bourgogne, Dijon, France.)

  • Jean Bourdon

    (Directeur de recherche émérite au CNRS, Institut de Recherche sur l’Éducation: Sociologie et Économie de l’Éducation (IREDU), Université de Bourgogne, Dijon, France.)

  • Muhammad Aslam

    (Assistant Professor, Department of Statistics , Bahauddin Zakariya University, Multan, Pakistan.)

Abstract

This article estimates the economic returns to schooling as well as analyzing other explanatory factors for the French labor market. It addresses the issue of endogeneity bias and proposes two new instruments for use in the instrumental variable two-stage least squares technique. Our results show that the proposed instruments are relevant and adequate, based on evidence from the available literature. After using the proposed instruments, we find that the OLS coefficients for schooling are biased downwards. Finally, we choose between the two proposed instruments.

Suggested Citation

  • Sajjad Haider Bhatti & Jean Bourdon & Muhammad Aslam, 2013. "Economic Returns to Education in France: OLS and Instrumental Variable Estimations," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 18(2), pages 51-63, July-Dec.
  • Handle: RePEc:lje:journl:v:18:y:2013:i:2:p:51-63
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    References listed on IDEAS

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    Cited by:

    1. Muhammad Nauman Malik & Masood Sarwar Awan, 2016. "Analysing Econometric Bias and Non-linearity in Returns to Education of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 837-851.
    2. Samira Hasanzadeh & Hashmat Khan, 2019. "Sources of Canadian economic growth," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 279-302, February.
    3. Sajjad Haider Bhatti & Muhammad Aslam & Jean Bourdon, 2018. "Market Returns to Education in Pakistan, Corrected for Endogeneity Bias," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 23(1), pages 79-96, Jan-June.
    4. Zhaohua Zhang & Yuxi Luo & Derrick Robinson, 2020. "Do Social Pensions Help People Living on the Edge? Assessing Determinants of Vulnerability to Food Poverty Among the Rural Elderly," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(1), pages 198-219, January.

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    More about this item

    Keywords

    Endogeneity bias; instrumental variable; Mincerian model; two-stage least squares; wage regression; France.;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • I2 - Health, Education, and Welfare - - Education
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • P5 - Economic Systems - - Comparative Economic Systems

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