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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. Dilip Mookherjee & Stefan Napel & Debraj Ray, 2008. "Aspirations, Segregation and Occupational Choice," Working Papers id:1710, eSocialSciences.
  2. Angrist, Joshua D & Krueger, Alan B, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 979-1014, November.
  3. 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.
  4. Antonio Ciccone & Giovanni Peri, 2006. "Identifying Human-Capital Externalities: Theory with Applications," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 381-412.
  5. 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.
  6. Lance Lochner, 2004. "Education, Work, and Crime: A Human Capital Approach," NBER Working Papers 10478, National Bureau of Economic Research, Inc.
  7. 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.
  8. 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.
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