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External Returns to Higher Education in Mexico 2000-2010

  • Isidro Soloaga

    ()

    (Department of Economics, Universidad Iberoamericana, Mexico City. Mexico)

  • Mariana Pereira

This paper estimates the external returns to higher education in Mexico using cross-sectional micro data from the 2000 and 2010 censuses’ samples. Because of identification problems, which according to the literature are the main challenge in this kind of model, an instrumental variable approach is used, taking the demographic structure as an instrument for the share of college graduates in a Metropolitan Area (MA). Results indicate that a one percentage point increase in the share of college graduates in Mexico increases the regression-adjusted average wages of an MA in more than six percent over a 10-year period. The constant composition approach is used to assess whether these effects are mainly due to externalities or to supply movements along a downward sloping demand. Part of the external returns to a higher share of college graduates is the result of externalities from direct or indirect interaction with these individuals. There appears to be heterogeneity in the magnitude of the spillovers according to educational level.

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File URL: http://www.iberoeconomia.mx/images/stories/Publicaciones/DocumentosTrabajo/Working_Paper_3_2013_External_Returns_to_Higher_Education_in_Mexico_PereiraSoloaga_2013.pdf
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Paper provided by Universidad Iberoamericana, Department of Economics in its series Working Papers with number 0313.

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Date of creation: 2013
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Handle: RePEc:uic:wpaper:0313
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  1. Ciccone Antonio & Peri Giovanni, 2007. "Identifying Human Capital Externalities. Theory with Applications," Working Papers 201098, Fundacion BBVA / BBVA Foundation.
  2. Daron Acemoglu & David Autor, 2012. "What Does Human Capital Do? A Review of Goldin and Katz's The Race between Education and Technology," NBER Working Papers 17820, National Bureau of Economic Research, Inc.
  3. Joshua Angrist & Alan Krueger, 1990. "Does Compulsory School Attendance Affect Schooling and Earnings?," Working Papers 653, Princeton University, Department of Economics, Industrial Relations Section..
  4. Lance Lochner, 2004. "Education, Work, and Crime: A Human Capital Approach," NBER Working Papers 10478, National Bureau of Economic Research, Inc.
  5. Dilip Mookherjee & Stefan Napel & Debraj Ray, 2008. "Aspirations, Segregation and Occupational Choice," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-182, Boston University - Department of Economics.
  6. Lance Lochner & Enrico Moretti, 2001. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," NBER Working Papers 8605, National Bureau of Economic Research, Inc.
  7. Rosenthal, Stuart S. & Strange, William C., 2008. "The attenuation of human capital spillovers," Journal of Urban Economics, Elsevier, vol. 64(2), pages 373-389, September.
  8. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June.
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