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Returns to Education: The Causal Effects of Education on Earnings, Health, and Smoking

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  • James J. Heckman
  • John Eric Humphries
  • Gregory Veramendi

Abstract

This paper estimates returns to education using a dynamic model of educational choice that synthesizes approaches in the structural dynamic discrete choice literature with approaches used in the reduced-form treatment effect literature. It is an empirically robust middle ground between the two approaches that estimates economically interpretable and policy-relevant dynamic treatment effects that account for heterogeneity in cognitive and noncognitive skills and the continuation values of educational choices. Graduating from college is not a wise choice for all. Ability bias is a major component of observed educational differentials. For some, there are substantial causal effects of education at all stages of schooling.

Suggested Citation

  • James J. Heckman & John Eric Humphries & Gregory Veramendi, 2018. "Returns to Education: The Causal Effects of Education on Earnings, Health, and Smoking," Journal of Political Economy, University of Chicago Press, vol. 126(S1), pages 197-246.
  • Handle: RePEc:ucp:jpolec:doi:10.1086/698760
    DOI: 10.1086/698760
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    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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