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

Author

Listed:
  • Joshua D. Angrist

    (Harvard University and NBER)

  • Alan B. Krueger

    (Princeton University and NBER)

Abstract

During the Vietnam draft priority for military service was randomly assigned to draft-age men in a series of lotteries. However, many men 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 that the Census Bureau assembled for 1979 and 1981-85. The results suggest that an extra year of schooling acquired in response to the lottery is associated with 6.6 percent higher weekly earnings. This figure is about 10 percent higher the OLS estimate of the return to education for this sample, which suggests there is little ability bias in conventional estimates of the return to education. Our findings are robust to a variety of "alternative assumptions about the effect of veteran status on earnings.

Suggested Citation

  • Joshua D. Angrist & Alan B. Krueger, 1991. "Estimating the Payoff to Schooling Using the Vietnam-era Draft Lottery," Working Papers 670, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:290
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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. Joshua Angrist & Alan Krueger, 1989. "Why Do World War II Veterans Earn More Than Nonveterans?," Working Papers 634, Princeton University, Department of Economics, Industrial Relations Section..
    12. Sherwin Rosen & Paul Taubman, 1982. "Changes in Life-Cycle Earnings: What Do Social Security Data Show?," Journal of Human Resources, University of Wisconsin Press, vol. 17(3), pages 321-338.
    13. 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..
    14. Angrist, Joshua D, 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records: Errata," American Economic Review, American Economic Association, vol. 80(5), pages 1284-1286, December.
    15. David A. Wise, 1987. "Public Sector Payrolls," NBER Books, National Bureau of Economic Research, Inc, number wise87-1, March.
    16. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 979-1014.
    17. De Tray, Dennis, 1982. "Veteran Status as a Screening Device," American Economic Review, American Economic Association, vol. 72(1), pages 133-142, March.
    18. 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.
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    20. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    education; ability; earnings;
    All these keywords.

    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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