What Determines the Return to Education: An Extra Year or a Hurdle Cleared?

26 Pages Posted: 1 Mar 2011

See all articles by Matthew Dickson

Matthew Dickson

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

Sarah Smith

University of Bristol; Institute for Fiscal Studies (IFS)

Abstract

The 1973 Raising of the School Leaving Age in England and Wales has been used to identify returns to years' schooling. However, the reform affected the proportion with qualifications, as well as schooling length. To shed light on whether the returns reflect extra schooling or qualifications, we exploit another institutional rule - the Easter Leaving Rule - to obtain unbiased estimates of the effect of qualifications. We find sizeable returns to academic qualifications - increasing the probability of employment by 40 percentage points. This is more than 70% of the estimated return based on RoSLA, suggesting that qualifications drive most - but not all - of the returns to education.

Keywords: returns to education, RoSLA, qualifications

JEL Classification: I21, I28, J24

Suggested Citation

Dickson, Matthew and Smith, Sarah, What Determines the Return to Education: An Extra Year or a Hurdle Cleared?. IZA Discussion Paper No. 5524, Available at SSRN: https://ssrn.com/abstract=1771246

Matthew Dickson (Contact Author)

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom

Sarah Smith

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
33
Abstract Views
401
PlumX Metrics