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Estimating the Payoff to Schooling Using the Vietnam-Era Draft Lottery

Author

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  • Joshua D. Angrist
  • Alan B. Krueger

Abstract

Between 1970 and 1973 priority for military service was randomly assigned to draft-age men in a series of lotteries. Many men who were at risk of being drafted managed to avoid military service by enrolling in school and obtaining an educational deferment This paper uses the draft lottery as a natural experiment to estimate the return to education and the veteran premium. Estimates are based on special extracts of the Current Population Survey for 1979and 1981-85. The results suggest that an extra year of schooling acquired in response to the lottery is associated with6.6 percent higher weekly earnings. This figure is about 10 percent higher than the OLS estimate of the return to education in this sample, which suggests there is omitted-variable bias in conventional estimates of the return to education. Our findings are robust to a variety of assumptions about the effect of veteran status on earnings.

Suggested Citation

  • Joshua D. Angrist & Alan B. Krueger, 1992. "Estimating the Payoff to Schooling Using the Vietnam-Era Draft Lottery," NBER Working Papers 4067, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4067
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    References listed on IDEAS

    as
    1. Mark C. Berger & Barry T. Hirsch, 1983. "The Civilian Earnings Experience of Vietnam - Era Veterans," Journal of Human Resources, University of Wisconsin Press, vol. 18(4), pages 455-479.
    2. Richard B. Freeman, 1975. "Overinvestment in College Training?," Journal of Human Resources, University of Wisconsin Press, vol. 10(3), pages 287-311.
    3. Angrist, Joshua & Krueger, Alan B, 1994. "Why Do World War II Veterans Earn More Than Nonveterans?," Journal of Labor Economics, University of Chicago Press, vol. 12(1), pages 74-97, January.
    4. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," American Economic Review, American Economic Association, vol. 80(3), pages 313-336, June.
    5. Hungerford, Thomas & Solon, Gary, 1987. "Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 175-177, February.
    6. Weiss, Yoram, 1971. "Ability and the Investment in Schooling: A Theoretical Note on J. Mincer's 'Distribution of Labor Income'," Journal of Economic Literature, American Economic Association, vol. 9(2), pages 459-461, June.
    7. repec:fth:prinin:254 is not listed on IDEAS
    8. Joshua D. Angrist, 1990. "The Draft Lottery and Voluntary Enlistment in the Vietnam Era," NBER Working Papers 3514, National Bureau of Economic Research, Inc.
    9. Blackburn, McKinley L & Neumark, David, 1993. "Omitted-Ability Bias and the Increase in the Return to Schooling," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 521-544, July.
    10. repec:fth:prinin:304 is not listed on IDEAS
    11. Orley Ashenfelter & Alan Krueger, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," Working Papers 683, Princeton University, Department of Economics, Industrial Relations Section..
    12. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 979-1014.
    13. De Tray, Dennis, 1982. "Veteran Status as a Screening Device," American Economic Review, American Economic Association, vol. 72(1), pages 133-142, March.
    14. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, vol. 84(5), pages 1157-1173, December.
    15. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    16. Jon R. Crane & David A. Wise, 1987. "Military Service and Civilian Earnings of Youths," NBER Chapters,in: Public Sector Payrolls, pages 119-146 National Bureau of Economic Research, Inc.
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    More about this item

    JEL classification:

    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • H69 - Public Economics - - National Budget, Deficit, and Debt - - - Other

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