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Estimating external returns to education in the US: a production function approach

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  • Michael Shields
  • Gail Shields

Abstract

Individual US data are merged with aggregate data by state for the US and used to estimate the external benefits of education. Aggregate state-wide variables used are the average level of education and per capita physical capital for each state. Individual variables used are each working adult's labour force experience, years of completed schooling, gender and immigration status. One difference from previous studies that estimate external benefits to education is that data on physical capital for each region (state) are available and used. Hence, the study is based on an explicit production function of the form suggested by Lucas. Strong evidence of the presence of external benefits to education for the US is found.

Suggested Citation

  • Michael Shields & Gail Shields, 2009. "Estimating external returns to education in the US: a production function approach," Applied Economics Letters, Taylor & Francis Journals, vol. 16(11), pages 1089-1092.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:11:p:1089-1092
    DOI: 10.1080/13504850701335343
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    1. Solow, Robert M., 2000. "Growth Theory: An Exposition," OUP Catalogue, Oxford University Press, edition 2, number 9780195109030.
    2. Winter-Ebmer, Rudolf, 1994. "Endogenous Growth, Human Capital, and Industry Wages," Bulletin of Economic Research, Wiley Blackwell, vol. 46(4), pages 289-314, October.
    3. Daron Acemoglu & Joshua Angrist, 1999. "How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws," NBER Working Papers 7444, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Shields, Michael P., 2008. "Why Should State Government Invest in College Education? An Equilibrium Approach for the US in 2000," IZA Discussion Papers 3569, Institute of Labor Economics (IZA).

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