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Is additional schooling worthless? Revising the zero returns to compulsory schooling in Germany

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  • Cygan-Rehm, Kamila

Abstract

This study estimates the effect of compulsory schooling on earnings. For identification, I exploit a German reform that extended the duration of secondary schooling in the 1960s. I find that hourly wages increase by 8% per additional year of schooling. This result challenges a study by Pischke and von Wachter (2008) who find zero returns to schooling using the same survey data and reform. I show that their small and insignificant estimates suffer from unconsidered institutional details. A complementary analysis using social security records confirms significant effects on earnings, but yields no effects on employment and eligibility for public transfers.

Suggested Citation

  • Cygan-Rehm, Kamila, 2018. "Is additional schooling worthless? Revising the zero returns to compulsory schooling in Germany," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181528, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc18:181528
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    References listed on IDEAS

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    Cited by:

    1. Mathias Huebener, 2017. "Intergenerational Effects of Education on Risky Health Behaviours and Long-Term Health," Discussion Papers of DIW Berlin 1709, DIW Berlin, German Institute for Economic Research.
    2. Ludger Wößmann, 2020. "Follow-up Costs of Not Learning: What We Can Learn from Research on Coronavirus-Related School Closures," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(06), pages 38-44, June.
    3. Silke Anger & Malte Sandner & Alexander M. Danzer & Axel Plünnecke & Olaf Köller & Enzo Weber & Samuel Mühlemann & Harald Pfeifer & Bernhard Wittek, 2020. "School Closures, Lack of Apprenticeships, No Jobs: Generation without a Future?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(09), pages 03-24, September.
    4. Julia Bock-Schappelwein & Ulrike Famira-Mühlberger, 2020. "Ökonomische Folgen von Schulschließungen," WIFO Research Briefs 18, WIFO.
    5. Harry Anthony Patrinos & George Psacharopoulos & Aysit Tansel, 2019. "Returns to Investment in Education: The Case of Turkey," Koç University-TUSIAD Economic Research Forum Working Papers 1906, Koc University-TUSIAD Economic Research Forum.
    6. Ardington, Cally & Wills, Gabrielle & Kotze, Janeli, 2021. "COVID-19 learning losses: Early grade reading in South Africa," International Journal of Educational Development, Elsevier, vol. 86(C).
    7. Werner, Katharina & Woessmann, Ludger, 2021. "The Legacy of COVID-19 in Education," IZA Discussion Papers 14796, Institute of Labor Economics (IZA).
    8. Bömmel, Nadja & Heineck, Guido, 2020. "Revisiting the Causal Effect of Education on Political Participation and Interest," IZA Discussion Papers 13954, Institute of Labor Economics (IZA).
    9. Daniel Graeber & Daniel D. Schnitzlein, 2019. "The Effect of Maternal Education on Offspring's Mental Health," SOEPpapers on Multidisciplinary Panel Data Research 1028, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Hofmarcher, Thomas, 2021. "The effect of education on poverty: A European perspective," Economics of Education Review, Elsevier, vol. 83(C).
    11. Josefine Koebe & Jan Marcus, 2020. "The Impact of the Length of Schooling on the Timing of Family Formation," Discussion Papers of DIW Berlin 1896, DIW Berlin, German Institute for Economic Research.
    12. Franziska Hampf, 2019. "The Effect of Compulsory Schooling on Skills: Evidence from a Reform in Germany," ifo Working Paper Series 313, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    13. Bömmel, Nadja & Heineck, Guido, 2020. "Revisiting the causal effect of education on political participation and interest," BERG Working Paper Series 167, Bamberg University, Bamberg Economic Research Group.

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    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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