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Economic Returns to Education in France: OLS and Instrumental Variable Estimations

Author

Listed:
  • Sajjad Haider Bhatti

    (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - UB - Université de Bourgogne)

  • Jean Bourdon

    (IREDU - Institut de recherche sur l'éducation : Sociologie et Economie de l'Education - UB - Université de Bourgogne)

  • Aslam Muhammad

    (Department of Statistics - BZU - Bahauddin Zakariya University)

Abstract

This article estimates the economic returns to schooling as well as analyzing other explanatory factors for the French labor market. It addresses the issue of endogeneity bias and proposes two new instruments for use in the instrumental variable two-stage least squares technique. Our results show that the proposed instruments are relevant and adequate, based on evidence from the available literature. After using the proposed instruments, we find that the OLS coefficients for schooling are biased downwards. Finally, we choose between the two proposed instruments.

Suggested Citation

  • Sajjad Haider Bhatti & Jean Bourdon & Aslam Muhammad, 2013. "Economic Returns to Education in France: OLS and Instrumental Variable Estimations," Post-Print halshs-00955559, HAL.
    • Handle: RePEc:hal:journl:halshs-00955559
    as

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    References listed on IDEAS

    as
    1. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section..
    2. Tansel, Aysit, 1994. "Wage employment, earnings and returns to schooling for men and women in Turkey," Economics of Education Review, Elsevier, vol. 13(4), pages 305-320.
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    7. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section..
    8. 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.
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    13. Ismail, Ramlee, 2007. "The Impact of Schooling Reform on Returns to Education in Malaysia," MPRA Paper 15021, University Library of Munich, Germany, revised 29 Jan 2008.
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    24. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 281-281.
    25. Ashenfelter, Orley & Harmon, Colm & Oosterbeek, Hessel, 1999. "A review of estimates of the schooling/earnings relationship, with tests for publication bias," Labour Economics, Elsevier, vol. 6(4), pages 453-470, November.
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    27. 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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    4. Zhaohua Zhang & Yuxi Luo & Derrick Robinson, 2020. "Do Social Pensions Help People Living on the Edge? Assessing Determinants of Vulnerability to Food Poverty Among the Rural Elderly," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(1), pages 198-219, January.

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    More about this item

    Keywords

    Endogeneity bias; Instrumental variable; Mincerian model; Two-stage least squares; Wage regression; France; Biais d'endogénéité; Variable instrumentale; Modèle mincérien; Équation de Mincer; Modèle des moindres carrés; Régression; Salaire;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • I2 - Health, Education, and Welfare - - Education
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems

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