Zero Returns to Compulsory Schooling in Germany: Evidence and Interpretation

48 Pages Posted: 6 Jul 2005 Last revised: 10 Sep 2022

See all articles by Jörn-Steffen Pischke

Jörn-Steffen Pischke

London School of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Till von Wachter

Columbia University - Columbia Business School, Economics; IZA Institute of Labor Economics

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Date Written: June 2005

Abstract

We estimate the impact of compulsory schooling on earnings using the changes in compulsory schooling laws for secondary schools in West German states during the period from 1948 to 1970. While our research design is very similar to studies for various other countries, we find very different estimates of the returns. Most estimates in the literature indicate returns in the range of 10 to 15 percent. We find no return to compulsory schooling in Germany in terms of higher wages. We investigate whether this is due to labor market institutions or the existence of the apprenticeship training system in Germany, but find no evidence for these explanations. We conjecture that the result might be due to the fact that the basic skills most relevant for the labor market are learned earlier in Germany than in other countries.

Suggested Citation

Pischke, Jörn-Steffen (Steve) and von Wachter, Till, Zero Returns to Compulsory Schooling in Germany: Evidence and Interpretation (June 2005). NBER Working Paper No. w11414, Available at SSRN: https://ssrn.com/abstract=745807

Jörn-Steffen (Steve) Pischke (Contact Author)

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Till Von Wachter

Columbia University - Columbia Business School, Economics ( email )

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IZA Institute of Labor Economics

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Germany

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