The Long-Term Spillover Effects of Changes in the Return to Schooling

52 Pages Posted: 24 Apr 2018

See all articles by Ran Abramitzky

Ran Abramitzky

Stanford University - Department of Economics

Victor Lavy

University of Warwick - Department of Economics; Hebrew University of Jerusalem - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Santiago Pérez

University of California, Davis

Date Written: April 2018

Abstract

We study the short and long-term spillover effects of a pay reform that substantially increased the returns to schooling in Israeli kibbutzim. This pay reform, which induced kibbutz students to improve their academic achievements during high school, spilled over to non-kibbutz members who attended schools with these kibbutz students. In the short run, peers of kibbutz students improved their high school outcomes and shifted to courses with higher financial returns. In the medium and long run, peers completed more years of postsecondary schooling and increased their earnings. We discuss three main spillover channels: diversion of teachers’ instruction time towards peers, peer effects from improved schooling performance of kibbutz students, and the transmission of information about the returns to schooling. While each of these channels likely contributed to improving the outcomes of peers, we provide suggestive evidence that the estimates are more consistent with the effects operating mainly through transmission of information.

Suggested Citation

Abramitzky, Ran and Lavy, Victor and Pérez, Santiago, The Long-Term Spillover Effects of Changes in the Return to Schooling (April 2018). NBER Working Paper No. w24515. Available at SSRN: https://ssrn.com/abstract=3163282

Ran Abramitzky (Contact Author)

Stanford University - Department of Economics ( email )

Stanford, CA 94305
United States

Victor Lavy

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3245 (Phone)
+972 2 581 6071 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Santiago Pérez

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
4
Abstract Views
105
PlumX Metrics