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Education Policy Reform and the Return to Schooling from Instrumental Variabes

  • Kevin J. Denny

    (University College Dublin)

  • Colm P. Harmon

    (University College Dublin)

We exploit an unusual policy reform which had the effect of reducing the direct cost of schooling in Ireland in the early 1970's. This gave rise to an increased level of schooling but with effects that vary across family background. This interaction generates a set of instrumental variables which we use to estimate the return to schooling allowing for the endogeneity of schooling. We find a large and well determined in the rate of return of the order of 11 or 12% substantially higher than the OLS estimates of around 7%.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1422.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1422
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  1. Callan, T. & Harmon, C.P., 1997. "The Economic Return to Schooling in Ireland," Papers 97/23, College Dublin, Department of Political Economy-.
  2. Meghir, Costas & Palme, Mårten, 1999. "Assessing the Effect of Schooling on Earnings Using a Social Experiment," SSE/EFI Working Paper Series in Economics and Finance 313, Stockholm School of Economics.
  3. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March.
  4. repec:fth:prinin:415 is not listed on IDEAS
  5. Harmon, C & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
  6. Kevin Denny & Colm Harmon & Sandra Redmond, 2000. "Functional literacy, educational attainment and earnings - evidence from the international adult literacy survey," IFS Working Papers W00/09, Institute for Fiscal Studies.
  7. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 2000. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," NBER Working Papers 7457, National Bureau of Economic Research, Inc.
  8. Joshua D. Angrist & Alan B. Krueger, 1990. "Does Compulsory School Attendance Affect Schooling and Earnings?," NBER Working Papers 3572, National Bureau of Economic Research, Inc.
  9. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, May.
  10. Tussing, A. Dale, 1978. "Irish Educational Expenditures - Past, Present, and Future," Research Series, Economic and Social Research Institute (ESRI), number GRS92.
  11. Callan, Tim & Wren, Anne, 1994. "Male-Female Wage Differentials: Analysis and Policy Issues," Research Series, Economic and Social Research Institute (ESRI), number GRS163.
  12. Kevin Denny & Colm Harmon & Dorren McMahon & Sandra Redmond, 1999. "Literacy and Education in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 30(3), pages 215-226.
  13. Imbens, G. & Angrist, J.D., 1992. "Average Causal Response with Variable Treatment Intensity," Harvard Institute of Economic Research Working Papers 1611, Harvard - Institute of Economic Research.
  14. Henry S. Farber & Jeffrey R. Kling & Alan Krueger, 1999. "Interpreting Instrumental Variables Estimates of the Returns to Schooling," Working Papers 794, Princeton University, Department of Economics, Industrial Relations Section..
  15. Uusitalo, R. & Conneely, K., 1998. "Estimating Heterogeneous Treatment Effects in the Becker Schooling Model," University of Helsinki, Department of Economics 435, Department of Economics.
  16. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  17. Colm Harmon; & Ian Walker, 1995. "Estimates of Economic Return to Schooling in the UK," Economics, Finance and Accounting Department Working Paper Series n540195, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  18. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," NBER Working Papers 4483, National Bureau of Economic Research, Inc.
  19. repec:fth:prinin:425 is not listed on IDEAS
  20. repec:pri:indrel:415 is not listed on IDEAS
  21. Lang, Kevin, 1993. "Ability Bias, Discount Rate Bias and the Return to Education," MPRA Paper 24651, University Library of Munich, Germany.
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