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Estimates of the causal effects of education on earnings over the lifecycle with cohort effects and endogenous education

  • Giuseppe Migali
  • Ian Walker

This paper acknowledges that the relationship between log wages and schooling is considerably more complex than the simple human capital earnings function suggests and that schooling is endogenous. We estimate a model where educational attainment is discrete and ordered and log wages are determined by a simple function of work experience for each level of attainment. We distinguish between lifecycle and cohort effects by exploiting the fact that we have a short panel. We strongly reject both the usual separability assumption and exogeneity of educational attainment.

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File URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/CausalEffectsEducationEarnings.pdf
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Paper provided by Lancaster University Management School, Economics Department in its series Working Papers with number 2248796.

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Date of creation: 2011
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Handle: RePEc:lan:wpaper:2248796
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  7. Kenny, Lawrence W, et al, 1979. "Returns to College Education: An Investigation of Self-Selection Bias Based on the Project Talent Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(3), pages 775-89, October.
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  10. Kelly Bedard & Elizabeth Dhuey, 2006. "The Persistence of Early Childhood Maturity: International Evidence of Long-Run Age Effects," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1437-1472, November.
  11. Kling, Jeffrey R, 2001. "Interpreting Instrumental Variables Estimates of the Returns to Schooling," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(3), pages 358-64, July.
  12. Puhani, Patrick A. & Weber, Andrea M., 2006. "Does the Early Bird Catch the Worm? Instrumental Variable Estimates of Educational Effects of Age of School Entry in Germany," Hannover Economic Papers (HEP) dp-332, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  13. Gauthier Lanot & Ian Walker, 1996. "The Union/Non-Union Wage Differential: An Application of Semi-Parametric Methods," Keele Department of Economics Discussion Papers (1995-2001) 96/9, Department of Economics, Keele University.
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  17. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
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  22. Kasey S. Buckles & Daniel M. Hungerman, 2013. "Season of Birth and Later Outcomes: Old Questions, New Answers," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 711-724, July.
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