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Education, Earnings, and the "Canadian G.I. Bill"

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  • Thomas Lemieux
  • David Card

Abstract

We use the unique experiences of Canadian World War II veterans to identify the effects of a large scale college subsidy program on educational attainment and earnings. Like the United States, Canada set up an extensive veteran's assistance program that provided financial aid and institutional support for college attendance. Because of differences in military enlistment rates and education systems, however, a much lower fraction of Quebec men benefited from VRA benefits than men from other provinces. Building on this fact, we analyze inter-cohort patterns of education and earnings for English- speaking men from Ontario, using French-speaking men from Quebec as a control group. We use data from the 1971 and 1981 Canadian Censuses to compare conventional (OLS) estimates of the return to schooling with instrumental variables (IV) estimates that use potential eligibility for VRA benefits as an exogenous determinant of schooling. Consistent with the recent literature, we find that the IV estimates are typically as big or bigger than the corresponding OLS estimates. We also explore an alternative identification strategy that utilizes information on family background available in the 1973 Canadian Job Mobility Survey. We hypothesize that veterans from relatively disadvantaged family backgrounds were more likely to be affected by the VRA's incentives than veterans from wealthier families. Using the interaction of veteran status and family background as an instrument for schooling, we again find rates of return to education as large or larger than the corresponding OLS estimates.

Suggested Citation

  • Thomas Lemieux & David Card, 1998. "Education, Earnings, and the "Canadian G.I. Bill"," NBER Working Papers 6718, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6718
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    References listed on IDEAS

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    1. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
    2. Imbens, G. & Angrist, J.D., 1992. "Average Causal Response with Variable Treatment Intensity," Harvard Institute of Economic Research Working Papers 1611, Harvard - Institute of Economic Research.
    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. John Bound & David A. Jaeger, 1996. "On the Validity of Season of Birth as an Instrument in Wage Equations: A Comment on Angrist & Krueger's "Does Compulsory School Attendance Affect Scho," NBER Working Papers 5835, National Bureau of Economic Research, Inc.
    5. Andrea Ichino & Rudolf Winter-Ebmer, 2004. "The Long-Run Educational Cost of World War II," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 57-86, January.
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    7. van der Klaauw, Wilbert, 1997. "A Regression-Discontinuity Evaluation of the Effect of Financial Aid Offers on College Enrollment," Working Papers 97-10, C.V. Starr Center for Applied Economics, New York University.
    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. Elchanan Cohn & John Addison, 1998. "The Economic Returns to Lifelong Learning in OECD Countries," Education Economics, Taylor & Francis Journals, vol. 6(3), pages 253-307.
    10. Wooldridge, Jeffrey M., 1997. "On two stage least squares estimation of the average treatment effect in a random coefficient model," Economics Letters, Elsevier, vol. 56(2), pages 129-133, October.
    11. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    12. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 533-575.
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    More about this item

    JEL classification:

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

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