THE COLLAPSE OF PRIMARY SCHOOLING RETURNS IN SOUTH AFRICA 1960–90

By 1975, the effect of a year's primary schooling upon the wages of Africans in South Africa had fallen to about 2.5 percent — one of the lowest primary schooling returns in the world. Secondary schooling returns were high throughout the period 1960–90. The collapse of primary schooling returns was due to declining school quality, an increase in the supply of primary school graduates, an increase in mining wages in the mid-seventies, and wage regulation by the Industrial Councils and Wage Boards. The low level of the return, compared with the returns to other races in South Africa, is due to the low quality of African primary schools. Implications for education spending patterns and wage regulation are pointed out.     

Estimates of the return to schooling and ability: evidence from sibling data

We use sibling data on wages, schooling, and aptitude test scores from the 1979 National Longitudinal Survey of Youth (NLSY79) to obtain OLS, family fixed effects, and fixed effects instrumental variable estimates of the return to schooling for a large sample of non-twin siblings. Following recent studies that use identical twin samples, we use sibling-reported schooling as an instrument for self-reported schooling. Controlling for aptitude test scores has a substantial impact on estimated returns to schooling even within families, and there is a large return to test scores that is comparable in size within and between families. We also find that the return to schooling is higher for older brothers than for younger brothers and for women than men. Finally, because the NLSY79 contains multiple sibling reports of education for the same individual, we are able to test and reject the overidentifying restrictions for the validity of sibling-reported schooling as an instrumental variable.     

Were there no returns to education in the USSR? Estimates from Soviet-period household data

The relation between wages and schooling in the USSR is studied, by estimating log–linear wage-equations for a sample of a Russian city in 1989. Estimates, made separately for men and women, show that there were rewards to education, contrary to claims by many Soviet and Western scholars. The low wages of some professionals, relative to skilled workers, were partly caused by gender differentials, partly by excess demand for manual labour. In addition, private costs of schooling were low and there were important non-monetary incentives connected with higher education.     

Over-education for the rich,under-education for the poor: A search-theoretic microfoundation

This paper studies the efficiency of educational choices in a two sector/two schooling level matching model of the labor market where a continuum of heterogenous workers allocates itself between sectors depending on their decision to invest in education. Individuals differ in working ability and schooling cost, the search market is segmented by education, and there is free entry of new firms in each sector. Self-selection in education causes composition effects in the distribution of skills across sectors. This in turn modifies the intensity of job creation, implying the private and social returns to schooling always differ. Provided that ability and schooling cost are not too positively correlated, agents with large schooling costs — the ‘poor’ — underinvest in education, while there is overinvestment among the low schooling cost individuals — the ‘rich’. We also show that education should be more taxed than subsidized when the Hosios condition holds.     

Bayesian inference in a correlated random coefficients model: Modeling causal effect heterogeneity with an application to heterogeneous returns to schooling

We consider the problem of causal effect heterogeneity from a Bayesian point of view. This is accomplished by introducing a three-equation system, similar in spirit to the work of Heckman and Vytlacil (1998), describing the joint determination of a scalar outcome, an endogenous “treatment” variable, and an individual-specific causal return to that treatment. We describe a Bayesian posterior simulator for fitting this model which recovers far more than the average causal effect in the population, the object which has been the focus of most previous work. Parameter identification and generalized methods for flexibly modeling the outcome and return heterogeneity distributions are also discussed.Combining data sets from High School and Beyond (HSB) and the 1980 Census, we illustrate our methods in practice and investigate heterogeneity in returns to education. Our analysis decomposes the impact of key HSB covariates on log wages into three parts: a “direct” effect and two separate indirect effects through educational attainment and returns to education. Our results strongly suggest that the quantity of schooling attained is determined, at least in part, by the individual’s own return to education. Specifically, a one percentage point increase in the return to schooling parameter is associated with the receipt of (approximately) 0.14 more years of schooling. Furthermore, when we control for variation in returns to education across individuals, we find no difference in predicted schooling levels for men and women. However, women are predicted to attain approximately 1/4 of a year more schooling than men on average as a result of higher rates of return to investments in education.     

Structural estimates of the intergenerational education correlation

Using a structural dynamic programming model, we investigate the relative importance of family background variables and individual specific abilities in explaining cross‐sectional differences in schooling attainments and wages. Each type of ability is the sum of one component correlated with family background variables and a residual (orthogonal) component which is purely individual specific. Household background variables (especially parents' education) account for 68% of the explained cross‐sectional variations in schooling attainments, while ability correlated with background variables accounts for 17% and pure individual specific ability accounts for 15%. Interestingly, individual differences in wages are mostly explained by pure individual specific abilities as they account for as much as 73% of the explained variations in wages. Family background variables account for only 19%, while ability endowments correlated with family background account for 8%. Copyright © 2003 John Wiley & Sons, Ltd.     

DOES EDUCATION REDUCE INCOME INEQUALITY? A META‐REGRESSION ANALYSIS

This paper reexamines the effects of education on inequality through a comprehensive meta‐regression analysis of the extant empirical literature. We find that education affects the two tails of the distribution of income: Education reduces the income share of top earners and increases the share of the bottom earners. Education has been particularly effective in reducing inequality in Africa. Some of the results suggest that secondary schooling appears to have a stronger effect than primary schooling, though this finding is not always robust. The heterogeneity in reported estimates can be largely explained by differences in the specification of the econometric model and measure of inequality and education.     

Educational mismatch,wages, and wage growth: Overeducation in Sweden, 1974–2000

We examine the impact of educational mismatch on wages and wage growth in Sweden. The empirical analyses, based on cross-sectional and panel data from the Level of living surveys 1974–2000, are guided by two main hypotheses: (a) that educational mismatch reflects human capital compensation rather than real mismatch, and (b) that educational mismatch is real but dissolves with time spent in the labour market, so that its impact on wages tends toward zero over a typical worker's career. Our findings do not support these hypotheses. First, significant differences in contemporaneous economic returns to education across match categories remain even after variations in ability are taken into account. Second, we find no evidence that the rate of wage growth is higher among overeducated workers than others. Our conclusion is that the overeducated are penalized early on by an inferior rate of return to schooling from which they do not recover.     

Hazard model estimates of the decision to reenroll in school

In a sample of males drawn from the National Longitudinal Survey of Youth, one-third of the individuals who first leave school between 1978 and 1990 are found to return to school before 1991. In light of this finding, the current study extends the analysis of schooling demand to a dynamic framework in order to consider the timing of the enrollment decision. A semiparametric, proportional hazard model for nonenrollment durations is estimated. The hazard model estimates are consistent with the view that young men reenroll in school when the costs are relatively low and/or the benefits are relatively high. For example, increases in state-wide average tuition levels and current earned wages lower the hazard rate, while increases in unemployment rates have the opposite effect.     

The structure of wages during the economic transition in Romania

I use cross-sectional individual data from the 1994 Integrated Household Survey (IHS) of Romania to analyze the determinants of male and female wages in public and private enterprises. Using quantile regression I estimate the rate of return to education and experience at different quantiles of the wage distribution. Higher levels of education are significantly associated with higher wages for both males and females in public firms. In private firms, only college education is correlated with significantly higher wages. I also find that there are no significant differences in the returns to human capital at the median and at the upper and lower tail of the distribution of gender-specific wages in each sector. Differences in individual characteristics are found to explain the highest portion of the male–female wage differential in Romania in both sectors.     

Specifying Human Capital

A review of the measures of the stock of human capital used in empirical growth research – including adult literacy rates, school enrollment ratios, and average years of schooling of the working‐age population – reveals that human capital is mostly poorly proxied. The simple use of the most common proxy, average years of schooling, misspecifies the relationship between education and the stock of human capital. Based on human capital theory, the specification of human capital is extended to allow for decreasing returns to education and for differences in the quality of a year of education. The different specifications give rise to hugely differing measures of the stock of human capital across countries, and development‐accounting results show that misspecified human capital measures can lead to severe underestimation of the development effect of human capital.     

Average and Marginal Returns to Upper Secondary Schooling in Indonesia

This paper estimates average and marginal returns to schooling in Indonesia using a semiparametric selection model. Identification of the model is given by geographic variation in access to upper secondary schools. We find that the return to upper secondary schooling varies widely across individuals: it can be as high as 50% per year of schooling for those very likely to enroll in upper secondary schooling, or as low as ?10% for those very unlikely to do so. Average returns for the student at the margin are substantial, but they are also well below those for the average student attending upper secondary schooling. Copyright © 2016 John Wiley & Sons, Ltd.     

THE EFFECTS OF COMPANY TRAINING,FURTHER EDUCATION AND THE YOUTH TRAINING SCHEME ON THE EARNINGS OF YOUNG EMPLOYEES*

Abstract This paper provides evidence on the impact of company training, of post-compulsory education and of the UK Youth Training Scheme in the late 1980's on the earnings of 21-year-old employees in England and Wales. Earnings equations are estimated for each of seven groups of employees who have followed alternative routes from compulsory education into employment, allowing for selectivity into these routes. There are several findings, including: both high parental social class and better school qualifications help to channel people into higher status routes, while high local unemployment has the opposite effect; participation in company training in long spells substantially raises wages but short spells do not; YTS participation fails to raise, and possibly substantially lowers, wages even three years after graduation compared to those who left school at 16 and went to work and received no training; there is weak evidence that, even for those that do not enter higher education, it is better to stay on at school after 16 than go into YTS.     

Dynamic efficiency of primary education in Brazil: Socioeconomic and infrastructure influence on school performance

Brazilian educational indicators have shown virtually no improvement since 2000, according to national and international evaluations. However, there are large disparities among schools, even in the poorest regions. This work evaluates efficiency of primary education in Brazilian schools using a dynamic DEA model, taking into account school differences in the socioeconomic levels of its students. Dynamic modelling is made possible by the inclusion of an infrastructure index as a carry-over between periods. Results are based on three model specifications that differ on their treatment of the socioeconomic variable. Efficiency distributions of these models are not statistically equal, but the general conclusions are convergent. They show almost no evolution on school efficiency between 2007 and 2015, but indicate possible efficiency improvements by investments in school infrastructure.     

Do Higher Real Minimum Wages Lead to More High School Dropouts? Evidence from Maryland Across Races, 1993–2004

We explore whether higher levels of the real minimum wage have differing effects on high school dropout rates across students of various races and ethnicities (whites, African Americans, Hispanics, and Asians). Using a panel of data across Maryland counties and annual observations in 1993–2004, we found higher real minimum wages to be associated with higher dropout rates for Hispanic students, but not for other races and ethnicities. We used a variety of model specifications and explanatory variables, including real income, the unemployment rate, teen pregnancy rates, and educational attainment among adults. Several of our findings are broadly consistent with commonly reported sociological observations regarding how behavioral choices may be affected by different levels across races and ethnicities of cultural integration of recent immigrants, family cohesiveness, the value placed on education, small business ownership, and hourly (vs. salaried) employment.     

Stay in school or start working? — The human capital investment decision under uncertainty and irreversibility

At any moment a student may decide to leave school and enter the labor market, or to stay in the education system. The timing of their departure determines their level of academic achievement and formal qualification. Education is a multi-stage process of investing in an accumulative human capital stock. How long can I expect to go to school? How much will I invest in my education? To answer these questions we apply the real option approach. We depart from recent literature by (1) adding accumulated education costs and determining the expected time of market entry, (2) considering complete earnings profiles including entry-level wages, sheepskin effects and earning dynamics, and (3) discussing the option value of schooling while introducing potential career opportunities or threats of unemployment modeled as major uncertain events connected with particular formal education achievements.     

Does Education Matter for Economic Growth?

Empirical growth regressions typically include mean years of schooling as a proxy for human capital. However, empirical research often finds that the sign and significance of schooling depends on the sample of observations or the specification of the model. We use a non‐parametric local‐linear regression estimator and a non‐parametric variable relevance test to conduct a rigorous and systematic search for significance of mean years of schooling by examining five of the most comprehensive schooling databases. Contrary to a few recent articles that have identified significant nonlinearities between education and growth, our results suggest that mean years of schooling is not a statistically relevant variable in growth regressions. However, we do find evidence (within a cross‐sectional framework), that educational achievement, measured by mean test scores, may provide a more reliable measure of human capital than mean years of schooling.     

The early inception of labor market gender differences

This paper analyzes gender differences in jobs while in school using school-class-based samples, a setting in which education differences, “glass ceilings”, and career interruptions due to parenthood are irrelevant. I find that in this early stage of life boys already earn substantially more than girls. The earnings gap cannot be explained by differences in participation rates and hours of work, nor by gender wage gaps within job types. It is entirely due to the fact that girls work more in job types with relatively low wages, in particular babysitting. During the period considered, 1984–2001, the gender patterns of jobs while in school largely remained unchanged.     

Three observations on wages and measured cognitive ability

This paper summarizes our recent research on the relationship between wages and measured cognitive ability. In it, we make three main points. First, we find that wage payment by ability does vary across race and gender in the US, and that the fraction of wage variance explained by cognitive ability is modest. Second, measured cognitive ability and schooling are so highly correlated that one cannot separate their effects without imposing strong, arbitrary parametric structure in estimation which, when tested, is rejected by the data. Third, controlling for cognitive ability, personality traits (socialization skills) are correlated with earnings, although they primarily operate through schooling attainment.     

Does class matter more than school? Evidence from a multilevel statistical analysis on Italian junior secondary school students

This paper assesses the differences in educational attainments between students across classes and schools they are grouped by, in the context of Italian educational system. The purpose is to identify a relationship between pupils' reading test scores and students' characteristics, stratifying for classes, schools and geographical areas. The dataset contains detailed information about more than 500,000 students at the first year of junior secondary school in the year 2012/2013. By means of multilevel linear models, it is possible to estimate statistically significant school and class effects, after adjusting for pupil's characteristics, including prior achievement. The results show that school and class effects are very heterogeneous across macro-areas (Northern, Central and Southern Italy), and that there are substantial discrepancies between and within schools; overall, class effects on achievement tend to be larger than school ones.