American Economic Review Vol. 101 No. 6 2011

Estimating Marginal Returns to Education

Pedro Carneiro¹; James J. Heckman²; Edward J. Vytlacil³

¹ Department of Economics, University College London, Gower Street, London WC1E 6BT, United Kingdom, Institute for Fiscal Studies and Centre for Microdata Methods and Practice. · ² Department of Economics, University of Chicago, 1126 E. 59th Street, Chicago, IL 60637, American Bar Foundation, Geary Institute, and University College Dublin. · ³ Department of Economics and Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281.

Abstract

This paper estimates marginal returns to college for individuals induced to enroll in college by different marginal policy changes. The recent instrumental variables literature seeks to estimate this parameter, but in general it does so only under strong assumptions that are tested and found wanting. We show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes. Our empirical analysis shows that returns are higher for individuals with values of unobservables that make them more likely to attend college. We contrast our estimates with IV estimates of the return to schooling.

DOI

10.1257/aer.101.6.2754

Volume

101

Issue

6

Pages

2754-2781

Language

en

Sources

openalex crossref bibtex:phds-export.bib

Cite

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