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What Determines the Return to Education: An Extra Year or a Hurdle Cleared?

  • Dickson, Matt

    ()

    (University of Bath)

  • Smith, Sarah

    ()

    (University of Bristol)

The 1973 Raising of the School Leaving Age in England and Wales has been used to identify returns to years’ schooling. However, the reform affected the proportion with qualifications, as well as schooling length. To shed light on whether the returns reflect extra schooling or qualifications, we exploit another institutional rule – the Easter Leaving Rule – to obtain unbiased estimates of the effect of qualifications. We find sizeable returns to academic qualifications – increasing the probability of employment by 40 percentage points. This is more than 70% of the estimated return based on RoSLA, suggesting that qualifications drive most – but not all – of the returns to education.

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File URL: http://ftp.iza.org/dp5524.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5524.

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Length: 26 pages
Date of creation: Feb 2011
Date of revision:
Publication status: published in: Economics of Education Review, 2011, 30 (6), 1167-1176
Handle: RePEc:iza:izadps:dp5524
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  1. Paul J. Devereux & Robert A. Hart, 2010. "Forced to be Rich? Returns to Compulsory Schooling in Britain," Economic Journal, Royal Economic Society, vol. 120(549), pages 1345-1364, December.
  2. Emilia Del Bono & Fernando Galindo-Rueda, 2007. "The Long Term Impacts of Compulsory Schooling: Evidence from a Natural Experiment in School Leaving Dates," CEE Discussion Papers 0074, Centre for the Economics of Education, LSE.
  3. Claire Crawford & Lorraine Dearden & Costas Meghir, 2010. "When you are born matters: the impact of date of birth on educational outcomes in England," IFS Working Papers W10/06, Institute for Fiscal Studies.
  4. Julien Grenet, 2013. "Is Extending Compulsory Schooling Alone Enough to Raise Earnings? Evidence from French and British Compulsory Schooling Laws," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(1), pages 176-210, 01.
  5. Lorraine Dearden, 1999. "Qualifications and earnings in Britain: how reliable are conventional OLS estimates of the returns to education?," IFS Working Papers W99/07, Institute for Fiscal Studies.
  6. Silles, Mary A., 2009. "The causal effect of education on health: Evidence from the United Kingdom," Economics of Education Review, Elsevier, vol. 28(1), pages 122-128, February.
  7. Arnaud Chevalier & Colm Harmon & Ian Walker & Yu Zhu, 2004. "Does Education Raise Productivity, or Just Reflect it?," Economic Journal, Royal Economic Society, vol. 114(499), pages F499-F517, November.
  8. Harmon, C & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
  9. Black, Sandra E. & Devereux, Paul J. & Salvanes, Kjell G., 2008. "Too Young to Leave the Nest? The Effects of School Starting Age," IZA Discussion Papers 3452, Institute for the Study of Labor (IZA).
  10. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2003. "Evaluating the impact of education on earnings in the UK: Models, methods and results from the NCDS," IFS Working Papers W03/20, Institute for Fiscal Studies.
  11. Devereux, Paul J. & Fan, Wen, 2011. "Earnings returns to the British education expansion," Economics of Education Review, Elsevier, vol. 30(6), pages 1153-1166.
  12. Del Bono, Emilia & Galindo-Rueda, Fernando, 2004. "Do a Few Months of Compulsory Schooling Matter? The Education and Labour Market Impact of School Leaving Rules," IZA Discussion Papers 1233, Institute for the Study of Labor (IZA).
  13. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2005. "Evaluating the effect of education on earnings: models, methods and results from the National Child Development Survey," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(3), pages 473-512.
  14. Damon Clark & Heather Royer, 2010. "The Effect of Education on Adult Health and Mortality: Evidence from Britain," NBER Working Papers 16013, National Bureau of Economic Research, Inc.
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