Causal Returns to Education: A Survey on Empirical Evidence for Germany

28 Pages Posted: 19 Jul 2006

See all articles by Anton Flossmann

Anton Flossmann

University of Konstanz - Department of Economics; Institute for the Study of Labor (IZA)

Winfried Pohlmeier

University of Konstanz - Department of Economics & Center of Finance & Econometrics (CoFE)

Date Written: April 13, 2006

Abstract

This paper surveys the empirical evidence on causal effects of education on earnings for Germany and compares alternative studies in the light of their underlying identifying assumptions. We work out the different assumptions taken by various studies, which lead to rather different interpretations of the estimated causal effect. In particular, we are interested in the question to what extend causal return estimates are informative regarding educational policy advice.

Despite the substantial methodological differences, we have to conclude that the empirical findings for Germany are quite robust and do not deviate substantially from each other. This also holds for the few studies which rely on ignorability conditions, regardless of whether they use educational attainment as a continuous treatment variable or as a discrete treatment indicator. Own estimates based on the matching approach indicate that the selection into upper secondary schooling is suboptimal.

Keywords: Returns to education, potential outcome approach, instrumental variables, unconfoundedness, control function approach

JEL Classification: C21, J24, J31

Suggested Citation

Flossmann, Anton and Pohlmeier, Winfried, Causal Returns to Education: A Survey on Empirical Evidence for Germany (April 13, 2006). Available at SSRN: https://ssrn.com/abstract=917325 or http://dx.doi.org/10.2139/ssrn.917325

Anton Flossmann (Contact Author)

University of Konstanz - Department of Economics ( email )

Universitätsstr. 10
Box: D 124
78457 Konstanz
Germany

HOME PAGE: http://econometrics.wiwi.uni-konstanz.de/staff/flossmann.htm

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Winfried Pohlmeier

University of Konstanz - Department of Economics & Center of Finance & Econometrics (CoFE) ( email )

Konstanz, D-78457
Germany

HOME PAGE: http://econometrics.wiwi.uni-konstanz.de

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