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

Author

Listed:
  • Dickson, Matt

    (University of Bath)

  • Smith, Sarah

    (University of Bristol)

Abstract

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.

Suggested Citation

  • Dickson, Matt & Smith, Sarah, 2011. "What Determines the Return to Education: An Extra Year or a Hurdle Cleared?," IZA Discussion Papers 5524, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp5524
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    References listed on IDEAS

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    More about this item

    Keywords

    qualifications; returns to education; RoSLA;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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