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Causal Returns to Schooling and Individual Heterogeneity

  • Pfeiffer, Friedhelm

    ()

    (ZEW Mannheim)

  • Pohlmeier, Winfried F. X.

    ()

    (University of Konstanz)

In this paper, human capital investments are evaluated by assuming heterogeneous returns to schooling. We use the potential outcome approach to measure the causal effect of human capital investments on earnings as a continuous treatment effect. Empirical evidence is based on a sample of West German full-time employed males (BIBB/IAB survey on educational and vocational attainment and career 1998/99). Our estimate of the average partial effect (APE) of an additional year of schooling amounts to 8.7%, which is higher than OLS estimates and quite similar to conventional instrumental variable estimates.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6588.

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Length: 24 pages
Date of creation: May 2012
Date of revision:
Publication status: published in: Review of Economic and Business Studies 2011, 4 (2), 29-41
Handle: RePEc:iza:izadps:dp6588
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  1. James J. Heckman & Sergio Urzua, 2009. "Comparing IV With Structural Models: What Simple IV Can and Cannot Identify," NBER Working Papers 14706, National Bureau of Economic Research, Inc.
  2. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-29, October.
  3. Felix Büchel & Andries de Grip & Antje Mertens (ed.), 2003. "Overeducation in Europe," Books, Edward Elgar Publishing, number 3054.
  4. James Heckman & Edward Vytlacil, 1998. "Instrumental Variables Methods for the Correlated Random Coefficient Model: Estimating the Average Rate of Return to Schooling When the Return is Correlated with Schooling," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 974-987.
  5. Michael Gebel & Friedhelm Pfeiffer, 2010. "Educational Expansion and Its Heterogeneous Returns for Wage Workers," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 130(1), pages 19-42.
  6. Michael Maier & Friedhelm Pfeiffer & Winfried Pohlmeier, 2003. "Overeducation and Individual Heterogeneity," Working Papers of the Research Group Heterogenous Labor 03-01, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
  7. Blechinger, Doris & Pfeiffer, Friedhelm, 1996. "Technological change and skill obsolescence: the case of German apprenticeship training," ZEW Discussion Papers 96-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Anton L. Flossmann & Winfried Pohlmeier, 2006. "Casual Returns to Education: A Survey on Empirical Evidence for Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(1), pages 6-23, January.
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