How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws

45 Pages Posted: 5 May 2000 Last revised: 24 Mar 2010

See all articles by Daron Acemoglu

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Joshua D. Angrist

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

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Date Written: December 1999

Abstract

Average schooling in US states is highly correlated with state wage levels, even after controlling for the direct effect of schooling on individual wages. We use an instrumental variables strategy to determine whether this relationship is driven by social returns to education. The instrumentals for average schooling are derived from information on the child labor laws and compulsory attendance laws that affected men in our Census samples, while quarter of birth is used as an instrument for individual schooling. This results in precisely estimated private returns to education of about seven percent, and small social returns, typically less than one percent, that are not significantly different from zero.

Suggested Citation

Acemoglu, Daron and Angrist, Joshua, How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws (December 1999). NBER Working Paper No. w7444. Available at SSRN: https://ssrn.com/abstract=195742

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Joshua Angrist

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