Abstract

http://ssrn.com/abstract=143852
 
 

Citations



 


 



Lower and Upper Bounds of Returns on Schooling: An Exercise in IV Estimation with Different Instruments


Rudolf Winter-Ebmer


Johannes Kepler University Linz - Department of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Andrea Ichino


University of Bologna


European Economic Review, May 1999

Abstract:     
Many recent studies that were based on "exogenous" sources of variation in education outcomes' IV estimates of returns to schooling were substantially higher than the corresponding OLS estimates. Card (1995a) suggests that these results are explained by the existence of heterogeneity in individual returns and by the fact that these studies are based on instruments that influence only the educational decision of individuals with high marginal returns due to either liquidity constraints or to high ability. This conclusion is consistent with the Local Average Treatment Effect (LATE) interpretation of IV (Imbens and Angrist, 1994) according to which IV identifies only the average returns of those who comply with the assignment-to-treatment mechanism implied by the instrument. We show evidence for Germany suggesting that returns to schooling are heterogeneous, instruments matter and the LATE interpretation of IV makes sense. With an appropriate choice of instruments we also show how IV can be used to approximate the range of variations of returns to schooling in Germany.

Note: This is a description of the paper and not the actual abstract.

JEL Classification: J31, I21, J24, C25

Accepted Paper Series





Not Available For Download

Date posted: May 14, 1999  

Suggested Citation

Winter-Ebmer, Rudolf and Ichino, Andrea, Lower and Upper Bounds of Returns on Schooling: An Exercise in IV Estimation with Different Instruments. European Economic Review, May 1999. Available at SSRN: http://ssrn.com/abstract=143852

Contact Information

Rudolf Winter-Ebmer (Contact Author)
University of Linz - Department of Economics ( email )
Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8236 (Phone)
+43 732 2468 8238 (Fax)
HOME PAGE: http://www.econ.jku.at/winter
Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )
Stumpergasse 56
A-1060 Vienna, A-1060
Austria
HOME PAGE: http://www.ihs.ac.at
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Andrea Ichino
University of Bologna ( email )
Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy
+39 349 5965919 (Phone)
Feedback to SSRN


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