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“For One More Year with You”: Changes in Compulsory Schooling, Education and the Distribution of Wages in Europe

  • Brunello, Giorgio

    ()

    (University of Padova)

  • Fort, Margherita

    ()

    (University of Bologna)

  • Weber, Guglielmo

    ()

    (University of Padova)

Using data from 12 European countries and the variation across countries and over time in the changes of minimum school leaving age, we study the effects of the quantity of education on the distribution of earnings. We find that compulsory school reforms significantly affect educational attainment, especially among individuals belonging to the lowest quantiles of the distribution of ability. There is also evidence that additional education reduces conditional wage inequality, and that education and ability are substitutes in the earnings function. These results do not support an elitist public education policy - more education to the brightest - and suggest that investing in the less fortunate, either because of poor labour market fortune or because of poor talent, could pay off both on efficiency and on equity grounds.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3102.

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Length: 56 pages
Date of creation: Oct 2007
Date of revision:
Publication status: published as 'Changes in Compulsory Schooling, Education and the Distribution of Wages in Europe' in: Economic Journal, 2009, 119 (536), 516 - 539
Handle: RePEc:iza:izadps:dp3102
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  8. Fertig, Michael & Kluve, Jochen, 2005. "The Effect of Age at School Entry on Educational Attainment in Germany," RWI Discussion Papers 27, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI).
  9. Jörn-Steffen Pischke, 2007. "The Impact of Length of the School Year on Student Performance and Earnings: Evidence From the German Short School Years," Economic Journal, Royal Economic Society, vol. 117(523), pages 1216-1242, October.
  10. Jorn-Steffen Pischke & Till von Wachter, 2005. "Zero Returns to Compulsory Schooling In Germany: Evidence and Interpretation," NBER Working Papers 11414, National Bureau of Economic Research, Inc.
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  12. Kevin Denny & Vincent O'Sullivan, 2004. "Can education compensate for low ability? Evidence from British data," IFS Working Papers W04/19, Institute for Fiscal Studies.
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  14. 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 1278-86, December.
  15. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 979-1014.
  16. Andrew Chesher, 2001. "Exogenous impact and conditional quantile functions," Econometrics 0108001, EconWPA.
  17. Pekkarinen, Tuomas, 2005. "Gender Differences in Educational Attainment: Evidence on the Role of the Tracking Age from a Finnish Quasi-Experiment," IZA Discussion Papers 1897, Institute for the Study of Labor (IZA).
  18. Plug, Erik J. S., 2001. "Season of birth, schooling and earnings," Journal of Economic Psychology, Elsevier, vol. 22(5), pages 641-660, October.
  19. Fertig, Michael & Kluve, Jochen, 2005. "The Effect of Age at School Entry on Educational Attainment in Germany," IZA Discussion Papers 1507, Institute for the Study of Labor (IZA).
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  21. Lance Lochner & Enrico Moretti, 2004. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," American Economic Review, American Economic Association, vol. 94(1), pages 155-189, March.
  22. 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.
  23. Hornstein, Andreas & Krusell, Per & Violante, Giovanni L, 2006. "Frictional Wage Dispersion in Search Models: A Quantitative Approach," CEPR Discussion Papers 5935, C.E.P.R. Discussion Papers.
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