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Estimating the Returns to Schooling Using Cohort-Level Maternal Education as an Instrument

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  • Winters, John V.

    () (Iowa State University)

Abstract

Formal education is widely thought to be a major determinant of individual earnings. This paper uses the American Community Survey to examine the effect of formal schooling on worker wages. Given the potential endogeneity of education decisions, I instrument for individual schooling using cohort-level mean maternal years of schooling from previous decennial censuses. The instrumental variables results suggest that schooling has a significant positive effect on worker wages. Specifically, an additional year or schooling is estimated to increase hourly wages by 10 percent for men and 12.6 percent for women.

Suggested Citation

  • Winters, John V., 2014. "Estimating the Returns to Schooling Using Cohort-Level Maternal Education as an Instrument," IZA Discussion Papers 8616, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8616
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    References listed on IDEAS

    as
    1. Björklund, Anders & Salvanes, Kjell G., 2011. "Education and Family Background: Mechanisms and Policies," Handbook of the Economics of Education, Elsevier.
    2. Hoogerheide, Lennart & Block, Joern H. & Thurik, Roy, 2012. "Family background variables as instruments for education in income regressions: A Bayesian analysis," Economics of Education Review, Elsevier, vol. 31(5), pages 515-523.
    3. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
    4. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    5. Block Joern H. & Hoogerheide Lennart & Thurik Roy, 2012. "Are Education and Entrepreneurial Income Endogenous? A Bayesian Analysis," Entrepreneurship Research Journal, De Gruyter, vol. 2(3), pages 1-29, July.
    6. Winters, John V., 2014. "The Production and Stock of College Graduates for U.S. States," IZA Discussion Papers 8730, Institute of Labor Economics (IZA).
    7. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
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    Cited by:

    1. Reilee L. Berger & John V. Winters, 2016. "Does Private Schooling Increase Adult Earnings? Cohort-Level Evidence for U.S. States," The Review of Regional Studies, Southern Regional Science Association, vol. 46(3), pages 281-294, Winter.
    2. Raymond B. Frempong & David Stadelmann, 2017. "Does Female Education have a Bargaining Effect on Household Welfare? Evidence from Ghana and Uganda," CREMA Working Paper Series 2017-08, Center for Research in Economics, Management and the Arts (CREMA).
    3. Winters, John V., 2014. "The Production and Stock of College Graduates for U.S. States," IZA Discussion Papers 8730, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    human capital; education; returns to schooling; wages; maternal education;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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