Returns to Schooling in Spain: How Reliable are Instrumental Variable Estimates?

24 Pages Posted: 12 May 2003

See all articles by Empar Pons

Empar Pons

University of Valencia - Department of Economics

Maria Teresa Gonzalo

University of Valencia - Department of Economics

Abstract

This paper studies the ordinary least-squares (OLS) and instrumental variable (IV) estimates of the returns to schooling for male workers in Spain. OLS estimates are often biased due to the endogeneity of schooling, measurement errors or omitted variables. Proper IV estimates correct this bias. The reliability of family background, natural experiments (based on changes in the education system and season of birth) and the availability of a college in the province is checked using Spanish data. The results suggest that background and college availability are valid instruments and that the IV estimates of the returns to schooling are higher than OLS estimates. These results are in line with the majority of previous results in the literature.

Suggested Citation

Pons, Empar and Gonzalo, Maria Teresa, Returns to Schooling in Spain: How Reliable are Instrumental Variable Estimates?. Labour, Vol. 16, pp. 747-770, 2002. Available at SSRN: https://ssrn.com/abstract=370506

Empar Pons (Contact Author)

University of Valencia - Department of Economics ( email )

Av. dels Tarongers s/n
46071 Valencia
Spain

Maria Teresa Gonzalo

University of Valencia - Department of Economics

Av. dels Tarongers s/n
46071 Valencia
Spain

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