Returns to Education: The Causal Effects of Education on Earnings, Health and Smoking

66 Pages Posted: 1 Jun 2016

See all articles by James J. Heckman

James J. Heckman

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

John Eric Humphries

Yale University, Department of Economics

Greg Veramendi

Arizona State University (ASU) - Economics Department

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Abstract

This paper estimates returns to education using a dynamic model of educational choice that synthesizes approaches in the structural dynamic discrete choice literature with approaches used in the reduced form treatment effect literature. It is an empirically robust middle ground between the two approaches which estimates economically interpretable and policy-relevant dynamic treatment effects that account for heterogeneity in cognitive and non-cognitive skills and the continuation values of educational choices. Graduating college is not a wise choice for all. Ability bias is a major component of observed educational differentials. For some, there are substantial causal effects of education at all stages of schooling.

Keywords: education, earnings, health, rates of return, causal effects of education, cognitive skills, non-cognitive skills

JEL Classification: C32, C38, I12, I14, I21

Suggested Citation

Heckman, James J. and Humphries, John Eric and Veramendi, Greg, Returns to Education: The Causal Effects of Education on Earnings, Health and Smoking. IZA Discussion Paper No. 9957. Available at SSRN: https://ssrn.com/abstract=2786041

James J. Heckman (Contact Author)

University of Chicago - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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American Bar Foundation

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Institute for the Study of Labor (IZA)

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CESifo (Center for Economic Studies and Ifo Institute)

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John Eric Humphries

Yale University, Department of Economics ( email )

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HOME PAGE: http://www.johnerichumphries.com

Greg Veramendi

Arizona State University (ASU) - Economics Department ( email )

Tempe, AZ 85287-3806
United States

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