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Testing the validity of the compulsory schooling law instrument

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  • Bolzern, Benjamin
  • Huber, Martin

Abstract

Changes in compulsory schooling laws have been proposed as an instrument for the endogenous choice of schooling. It has been argued that raising minimum schooling exogenously increases the educational attainment of a subset of pupils without directly affecting later life outcomes such as income or health. Using the method of Huber and Mellace (2015) and data from the Survey of Health, Ageing and Retirement in Europe, we jointly test random instrument assignment, weak monotonicity of education in the instrument, and the instrument exclusion restriction. The satisfaction of these restrictions permits identifying the local average treatment effect of education on those choosing more schooling as a reaction to the law change. Our results do not point to the invalidity of the schooling law instrument, though we acknowledge that even asymptotically, testing cannot detect all possible violations of instrument validity.

Suggested Citation

  • Bolzern, Benjamin & Huber, Martin, 2017. "Testing the validity of the compulsory schooling law instrument," FSES Working Papers 480, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    • Handle: RePEc:fri:fribow:fribow00480
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    References listed on IDEAS

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    1. Giorgio Brunello & Margherita Fort & Guglielmo Weber, 2009. "Changes in Compulsory Schooling, Education and the Distribution of Wages in Europe," Economic Journal, Royal Economic Society, vol. 119(536), pages 516-539, March.
    2. Colm Harmon; & Ian Walker, 1995. "Estimates of Economic Return to Schooling in the UK," Economics Department Working Paper Series n540195, Department of Economics, National University of Ireland - Maynooth.
    3. Toru Kitagawa, 2015. "A Test for Instrument Validity," Econometrica, Econometric Society, vol. 83(5), pages 2043-2063, September.
    4. Ismael Mourifié & Yuanyuan Wan, 2017. "Testing Local Average Treatment Effect Assumptions," The Review of Economics and Statistics, MIT Press, vol. 99(2), pages 305-313, May.
    5. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-1286, December.
    6. Chen, Le-Yu & Szroeter, Jerzy, 2014. "Testing multiple inequality hypotheses: A smoothed indicator approach," Journal of Econometrics, Elsevier, vol. 178(P3), pages 678-693.
    7. Philip Oreopoulos, 2006. "Estimating Average and Local Average Treatment Effects of Education when Compulsory Schooling Laws Really Matter," American Economic Review, American Economic Association, vol. 96(1), pages 152-175, March.
    8. Martin Huber & Giovanni Mellace, 2015. "Testing Instrument Validity for LATE Identification Based on Inequality Moment Constraints," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 398-411, May.
    9. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 979-1014.
    10. G. Brunello & M. Fort & G. Weber & C. T. Weiss, 2013. "Testing the Internal Validity of Compulsory School Reforms as Instrument for Years of Schooling," Working Papers wp911, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Harmon, Harmon & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
    12. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
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    Cited by:

    1. Sophie van Huellen & Duo Qin, 2019. "Compulsory Schooling and Returns to Education: A Re-Examination," Econometrics, MDPI, vol. 7(3), pages 1-20, September.
    2. Hofmarcher, Thomas, 2021. "The effect of education on poverty: A European perspective," Economics of Education Review, Elsevier, vol. 83(C).

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    More about this item

    Keywords

    instrumental variable; schooling laws; schooling reforms ; treatment effects; LATE; tests;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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