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

Author

Listed:
  • James J. Heckman

    (The University of Chicago)

  • John Eric Humphries

    (University of Chicago, Department of Economics)

  • Gregory Veramendi

    (W.P. Carey School of Business, Arizona State University)

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 which estimates economically interpretable and policy-relevant dynamic treatment effects that account for heterogeneity in cognitive and non-cognitive skills and the continuation values of educational choices. Graduating 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, 2016. "Returns to Education: The Causal Effects of Education on Earnings, Health and Smoking," Working Papers 2016-014, Human Capital and Economic Opportunity Working Group.
  • Handle: RePEc:hka:wpaper:2016-014
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    More about this item

    Keywords

    education; Earnings; Health; rates of return; causal effects of education; cognitive skills; non-cognitive skills;
    All these keywords.

    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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