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Volume 69, Issue 5
September 2001
Pages 1127–1160
Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems
Authors

    David Card
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        Dept. of Economics, University of California, Berkeley, USA.
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        Fisher-Schultz Lecture delivered to the European Meeting of the Econometric Society, September, 1998. I am grateful to Joshua Angrist, Michael Boozer, Ken Chay, Andrew Hildreth, Alan Krueger, and a co-editor for comments on earlier versions of this material, and to James Powell for helpful discussions.
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    First published: September 2001 Full publication history
    DOI: 10.1111/1468-0262.00237   View/save citation
    Cited by (CrossRef): 393 articles Check for updates
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Abstract

This paper reviews a set of recent studies that have attempted to measure the causal effect of education on labor market earnings by using institutional features of the supply side of the education system as exogenous determinants of schooling outcomes. A simple theoretical model that highlights the role of comparative advantage in the optimal schooling decision is presented and used to motivate an extended discussion of econometric issues, including the properties of ordinary least squares and instrumental variables estimators. A review of studies that have used compulsory schooling laws, differences in the accessibility of schools, and similar features as instrumental variables for completed education, reveals that the resulting estimates of the return to schooling are typically as big or bigger than the corresponding ordinary least squares estimates. One interpretation of this finding is that marginal returns to education among the low-education subgroups typically affected by supply-side innovations tend to be relatively high, reflecting their high marginal costs of schooling, rather than low ability that limits their return to education.

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Footnotes

    Fisher-Schultz Lecture delivered to the European Meeting of the Econometric Society, September, 1998. I am grateful to Joshua Angrist, Michael Boozer, Ken Chay, Andrew Hildreth, Alan Krueger, and a co-editor for comments on earlier versions of this material, and to James Powell for helpful discussions.

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Citing Literature

    Number of times cited : 393

    1 Di Xu , Jeffrey Fletcher , Bridges, Pathways and Transitions, 2017 , 227 CrossRef
    2 Paul Glewwe , Qiuqiong Huang , Albert Park , Cognitive skills, noncognitive skills, and school-to-work transitions in rural China, Journal of Economic Behavior & Organization , 2017 , 134 , 141 CrossRef
    3 Gabin Langevin , David Masclet , Fabien Moizeau , Emmanuel Peterle , Ethnic gaps in educational attainment and labor-market outcomes: evidence from France, Education Economics , 2017 , 25 , 1, 84 CrossRef
    4 Thanyaporn Chankrajang , Raya Muttarak , Green Returns to Education: Does Schooling Contribute to Pro-Environmental Behaviours? Evidence from Thailand, Ecological Economics , 2017 , 131 , 434 CrossRef
    5 Simone Balestra , Uschi Backes-Gellner , Heterogeneous returns to education over the wage distribution: Who profits the most?, Labour Economics , 2017 CrossRef
    6 George Bulman , Weighting recent performance to improve college and labor market outcomes, Journal of Public Economics , 2017 , 146 , 97 CrossRef
    7 Irina Murtazashvili , Jeffrey M. Wooldridge , A control function approach to estimating switching regression models with endogenous explanatory variables and endogenous switching, Journal of Econometrics , 2016 , 190 , 2, 252 CrossRef
    8 TOSHIHIRO IHORI , KIMIYOSHI KAMADA , TAKASHI SATO , Altruism, Liquidity Constraint, and Investment in Education, Journal of Public Economic Theory , 2016 Wiley Online Library
    9 Pedro Carneiro , Michael Lokshin , Nithin Umapathi , Average and Marginal Returns to Upper Secondary Schooling in Indonesia, Journal of Applied Econometrics , 2016 Wiley Online Library
    10 Carlos Felipe Balcázar , Hugo Ñopo , Broken gears: the value added of higher education on teachers’ academic achievement, Higher Education , 2016 , 72 , 3, 341 CrossRef
    11 Anil Kumar , Che-Yuan Liang , Declining Female Labor Supply Elasticities in the United States and Implications for Tax Policy: Evidence From Panel Data, National Tax Journal , 2016 , 69 , 3, 481 CrossRef
    12 Eve Caroli , Mathilde Godard , Does job insecurity deteriorate health?, Health Economics , 2016 , 25 , 2, 131 Wiley Online Library
    13 Johannes Tabi Atemnkeng , Andrew Wujung Vukenkeng , Does social capital really determine poverty? Evidence from a Cameroon household survey, African Journal of Science, Technology, Innovation and Development , 2016 , 8 , 1, 97 CrossRef
    14 Otto Toivanen , Lotta Väänänen , Education and Invention, Review of Economics and Statistics , 2016 , 98 , 2, 382 CrossRef
    15 Ling Zhou , Huazhen Lin , Yi-Chen Lin , Education, Intelligence, and Well-Being: Evidence from a Semiparametric Latent Variable Transformation Model for Multiple Outcomes of Mixed Types, Social Indicators Research , 2016 , 125 , 3, 1011 CrossRef
    16 Miguel Sánchez-Romero , Hippolyte d׳Albis , Alexia Prskawetz , Education, lifetime labor supply, and longevity improvements, Journal of Economic Dynamics and Control , 2016 , 73 , 118 CrossRef
    17 Brian P. McCall , Elizabeth M. Starr , Effects of autism spectrum disorder on parental employment in the United States: evidence from the National Health Interview Survey, Community, Work & Family , 2016 , 1 CrossRef
    18 Annie Tubadji , Vassilis Angelis , Peter Nijkamp , Endogenous intangible resources and their place in the institutional hierarchy, Review of Regional Research , 2016 , 36 , 1, 1 CrossRef
    19 William R. Doyle , Benjamin T. Skinner , Estimating the education-earnings equation using geographic variation, Economics of Education Review , 2016 , 53 , 254 CrossRef
    20 Christopher P. Adams , Finite mixture models with one exclusion restriction, The Econometrics Journal , 2016 , 19 , 2, 150 Wiley Online Library

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