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Estimating the Economic Return to Schooling on the Basis of Panel Data

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  • Kalwij, A.S.

    (Tilburg University, Center For Economic Research)

Abstract

This paper is concerned with estimating the economic return to schooling of men in the Netherlands.We adopt an IV approach to estimate a panel data model with random individual effects.We exploit the fact that older individuals have relatively less schooling compared to younger individuals to construct instruments and include GNP per worker at the time an individual tumed 16 to control for birth-cohort effects.The estimated return to schooling is about 15%. Ignoring the endogencity of schooling results in a lower return to schooling. Ignoring birth-cohort effects results in a lower return to work experience.

Suggested Citation

  • Kalwij, A.S., 1996. "Estimating the Economic Return to Schooling on the Basis of Panel Data," Discussion Paper 1996-55, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:e9ee1abf-081f-48fc-8525-970de1970498
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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.
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    4. Colm Harmon; & Ian Walker, 1995. "Estimates of Economic Return to Schooling in the UK," Economics, Finance and Accounting Department Working Paper Series n540195, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
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    7. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
    8. Bekker, Paul A, 1994. "Alternative Approximations to the Distributions of Instrumental Variable Estimators," Econometrica, Econometric Society, vol. 62(3), pages 657-681, May.
    9. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, pages 1278-1286.
    10. repec:fth:prinin:317 is not listed on IDEAS
    11. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, January.
    12. Magnus, J.R., 1978. "Maximum likelihood estimation of the GLS model with unknown parameters in the disturbance covariance matrix," Other publications TiSEM 388c2c25-0925-4b56-834a-7, Tilburg University, School of Economics and Management.
    13. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
    14. Zvi Griliches, 1957. "Specification Bias in Estimates of Production Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 39(1), pages 8-20.
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    16. 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.
    17. Harmon, Harmon & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
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    Cited by:

    1. Levin, Jesse & Plug, Erik J. S., 1999. "Instrumenting education and the returns to schooling in the Netherlands," Labour Economics, Elsevier, vol. 6(4), pages 521-534, November.
    2. Dinand Webbink, 2004. "Returns to university education; evidence from an institutional reform," CPB Discussion Paper 34, CPB Netherlands Bureau for Economic Policy Analysis.
    3. A. Nikolaou & I. Theodossiou, 2006. "Returns to qualifications and occupation for males and females: evidence from the British Workplace Employee Relations Survey (WERS) 1998," Applied Economics Letters, Taylor & Francis Journals, vol. 13(10), pages 665-673.
    4. García-Mainar, Inmaculada & Montuenga-Gómez, Víctor M., 2009. "Education returns of wage earners and self-employed workers: Response," Economics of Education Review, Elsevier, vol. 28(5), pages 645-647, October.
    5. Fernando Barceinas, 2003. "Endogeneidad y rendimientos de la educación," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 18(1), pages 79-131.
    6. Garcia-Mainar, Inmaculada & Montuenga-Gomez, Victor M., 2005. "Education returns of wage earners and self-employed workers: Portugal vs. Spain," Economics of Education Review, Elsevier, vol. 24(2), pages 161-170, April.

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