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Education Policy Reform and the Return to Schooling from Instrumental Variables

Author

Listed:
  • Denny, K.J.
  • Harmon, C.P.

Abstract

This paper exploits an unusual policy reform that had the effect of reducing the direct cost of schooling in Ireland in the late 1960's. This gave rise to an increased level of schooling but with effects that vary substantially across family background. This interaction of educational reform and family background generates a set of instrumental variables that are used to estimate the return to schooling allowing for the endogeneity of schooling Using a standard Mincer type model we find a large and well-determined rate of return of around 12% which are substantially higher than the OLS estimates of around 7%.

Suggested Citation

  • Denny, K.J. & Harmon, C.P., 2000. "Education Policy Reform and the Return to Schooling from Instrumental Variables," Papers 00/12, College Dublin, Department of Political Economy-.
    • Handle: RePEc:fth:dublec:00/12
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    Citations

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    Cited by:

    1. Kevin Denny & Colm Harmon, 2000. "The impacts of education and training on the labour market experiences of young adults," Open Access publications 10197/731, School of Economics, University College Dublin.
    2. Gudrun Biffl, 2002. "Kosten und Nutzen des Bildungssystems im internationalen Vergleich," WIFO Monatsberichte (monthly reports), WIFO, vol. 75(6), pages 397-411, June.
    3. Tjaša Bartolj & Aleš AhCan & Aljoša Feldin & Sašo Polanec, 2013. "Evolution of private returns to tertiary education during transition: evidence from Slovenia," Post-Communist Economies, Taylor & Francis Journals, vol. 25(3), pages 407-424, September.
    4. Brunello, Giorgio & Fort, Margherita & Weber, Guglielmo, 2007. "“For One More Year with You”: Changes in Compulsory Schooling, Education and the Distribution of Wages in Europe," IZA Discussion Papers 3102, IZA Network @ LISER.
    5. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    6. Colm Harmon, 2002. "Schooling returns, schooling decisions and educational finance," Open Access publications 10197/669, School of Economics, University College Dublin.
    7. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, April.
    8. Kevin Denny, 2003. "The effects of human capital on social capital : a cross-country analysis (version 1.6)," Working Papers 200318, School of Economics, University College Dublin.
    9. Christian K. Darko & Kennedy K. Abrokwa, 2020. "Do you really need it? Educational mismatch and earnings in Ghana," Review of Development Economics, Wiley Blackwell, vol. 24(4), pages 1365-1392, November.
    10. Ma, Yuanyuan & Nolan, Anne & Smith, James P., 2018. "The value of education to health: Evidence from Ireland," Economics & Human Biology, Elsevier, vol. 31(C), pages 14-25.
    11. Kevin Denny, 2003. "The effects of human capital on social capital : a cross-country analysis," Open Access publications 10197/733, School of Economics, University College Dublin.
    12. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2000. "The returns to education : a review of evidence, issues and deficiencies in the literature," Open Access publications 10197/670, School of Economics, University College Dublin.
    13. Marina Arkhipova & Alexey Egorov & Viacheslav Sirotin, 2017. "Returns to schooling in Russia and Ukraine: Comparative analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 47, pages 100-122.
    14. repec:ucn:wpaper:10197/1099 is not listed on IDEAS
    15. Andrea Mercatanti, 2008. "A likelihood-based analysis for relaxing the exclusion restriction in randomized experiments with imperfect compliance," Temi di discussione (Economic working papers) 683, Bank of Italy, Economic Research and International Relations Area.
    16. Concetta, MENDOLICCHIO, 2006. "A Disaggregate Analysis of Private Returns to Education in Italy," Discussion Papers (ECON - Département des Sciences Economiques) 2006054, Université catholique de Louvain, Département des Sciences Economiques.
    17. Kevin Denny, 2003. "The effects of human capital on social capital : a cross-country analysis (Version 1.61)," Open Access publications 10197/1106, School of Economics, University College Dublin.
    18. Empar Pons & Maria Teresa Gonzalo, 2001. "Returns to Schooling in Spain. How Reliable Are IV Estimates?," Working Papers 446, Queen Mary University of London, School of Economics and Finance.
    19. Seamus McGuinness, 2003. "University quality and labour market outcomes," Applied Economics, Taylor & Francis Journals, vol. 35(18), pages 1943-1955.
    20. Shandre M. Thangavelu & Hu Guangzhou, 2006. "Lessons from "benchmark" countries : Korea & Ireland," Labor Economics Working Papers 21820, East Asian Bureau of Economic Research.
    21. Deng, Binbin, 2010. "Schooling and Wage Revisited: Does Higher IQ Really Give You Higher Income?," MPRA Paper 23206, University Library of Munich, Germany.
    22. Chris Sakellariou, 2006. "Education policy reform, local average treatment effect and returns to schooling from instrumental variables in the Philippines," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 473-481.
    23. repec:ucn:wpaper:10197/1106 is not listed on IDEAS
    24. Harry Patrinos & Chris Sakellariou, 2005. "Schooling and Labor Market Impacts of a Natural Policy Experiment," LABOUR, CEIS, vol. 19(4), pages 705-719, December.
    25. Yuanyuan Ma, 2017. "Civic Returns to Education: Voter Turnout in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 48(2), pages 145-169.

    More about this item

    Keywords

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    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • C00 - Mathematical and Quantitative Methods - - General - - - General

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