IDEAS home Printed from https://ideas.repec.org/a/eee/ecoedu/v53y2016icp254-267.html
   My bibliography  Save this article

Estimating the education-earnings equation using geographic variation

Author

Listed:
  • Doyle, William R.
  • Skinner, Benjamin T.

Abstract

We expand on the literature on the causal impact of postsecondary education on earnings by introducing a richer set of location-based measures as instruments for years of education. Utilizing data from the National Longitudinal Study of Youth, 1997, we implement six different sets of instruments based on geographic variation: presence of a four-year or two-year college in the county, inverse log distance to in-state two-year colleges, distance-weighted tuition and distance-weighted enrollment at in-state two-year colleges, and inverse log distance to all colleges. We find that these alternative measures yield differing estimates of the impact of educational attainment on earnings. Using our preferred measure of geographic variation, one additional year of postsecondary attainment results in a 9.7% increase in yearly earnings. We find a larger impact of postsecondary attainment for women, and no measurable impact of postsecondary attainment for men.

Suggested Citation

  • Doyle, William R. & Skinner, Benjamin T., 2016. "Estimating the education-earnings equation using geographic variation," Economics of Education Review, Elsevier, vol. 53(C), pages 254-267.
    • Handle: RePEc:eee:ecoedu:v:53:y:2016:i:c:p:254-267
    DOI: 10.1016/j.econedurev.2016.03.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0272775715300303
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econedurev.2016.03.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-620, September.
    2. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post--secondary Schooling," Economic Journal, Royal Economic Society, vol. 112(482), pages 705-734, October.
    3. Michael Ransom & Ronald L. Oaxaca, 2005. "Intrafirm Mobility and Sex Differences in Pay," ILR Review, Cornell University, ILR School, vol. 58(2), pages 219-237, January.
    4. Alm, James & Winters, John V., 2009. "Distance and intrastate college student migration," Economics of Education Review, Elsevier, vol. 28(6), pages 728-738, December.
    5. James J. Heckman, 2011. "The American Family in Black and White: A Post-Racial Strategy for Improving Skills to Promote Equality," NBER Working Papers 16841, National Bureau of Economic Research, Inc.
    6. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366, Elsevier.
    7. Kling, Jeffrey R, 2001. "Interpreting Instrumental Variables Estimates of the Returns to Schooling," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(3), pages 358-364, July.
    8. Terry Long, B.Bridget, 2004. "How have college decisions changed over time? An application of the conditional logistic choice model," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 271-296.
    9. Jepsen, Christopher & Montgomery, Mark, 2009. "Miles to go before I learn: The effect of travel distance on the mature person's choice of a community college," Journal of Urban Economics, Elsevier, vol. 65(1), pages 64-73, January.
    10. Pedro Carneiro & James J. Heckman & Edward J. Vytlacil, 2011. "Estimating Marginal Returns to Education," American Economic Review, American Economic Association, vol. 101(6), pages 2754-2781, October.
    11. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
    12. Nabanita Datta Gupta & Ronald L. Oaxaca & Nina Smith, 2006. "Swimming Upstream, Floating Downstream: Comparing Women's Relative Wage Progress in the United States and Denmark," ILR Review, Cornell University, ILR School, vol. 59(2), pages 243-266, January.
    13. Christopher Avery & Caroline Minter Hoxby, 2004. "Do and Should Financial Aid Packages Affect Students' College Choices?," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 239-302, National Bureau of Economic Research, Inc.
    14. Greenwood, Michael J, 1969. "An Analysis of the Determinants of Geographic Labor Mobility in the United States," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 189-194, May.
    15. Levin, Henry M. & Belfield, Clive & Muennig, Peter & Rouse, Cecilia, 2007. "The public returns to public educational investments in African-American males," Economics of Education Review, Elsevier, vol. 26(6), pages 699-708, December.
    16. James J. Heckman & Paul A. LaFontaine, 2010. "The American High School Graduation Rate: Trends and Levels," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 244-262, May.
    17. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
    18. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-529, October.
    19. Jepsen, Christopher & Montgomery, Mark, 2012. "Back to school: An application of human capital theory for mature workers," Economics of Education Review, Elsevier, vol. 31(1), pages 168-178.
    20. repec:fth:prinin:317 is not listed on IDEAS
    21. Griffith, Amanda L. & Rothstein, Donna S., 2009. "Can't get there from here: The decision to apply to a selective college," Economics of Education Review, Elsevier, vol. 28(5), pages 620-628, October.
    22. Caroline M. Hoxby, 1997. "How the Changing Market Structure of U.S. Higher Education Explains College Tuition," NBER Working Papers 6323, National Bureau of Economic Research, Inc.
    23. Michael W. L. Elsby & Bart Hobijn & Aysegul Sahin, 2010. "The Labor Market in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 1-69.
    24. Philip Oreopoulos & Uros Petronijevic, 2013. "Making College Worth It: A Review of Research on the Returns to Higher Education," NBER Working Papers 19053, National Bureau of Economic Research, Inc.
    25. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    26. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
    27. Fabian Lange, 2007. "The Speed of Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 1-35.
    28. Black, Sandra E. & Machin, Stephen, 2011. "Housing Valuations of School Performance," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 10, pages 485-519, Elsevier.
    29. David J. Deming & Claudia Goldin & Lawrence F. Katz & Noam Yuchtman, 2015. "Can Online Learning Bend the Higher Education Cost Curve?," American Economic Review, American Economic Association, vol. 105(5), pages 496-501, May.
    30. Kane, Thomas J & Rouse, Cecilia Elena, 1995. "Labor-Market Returns to Two- and Four-Year College," American Economic Review, American Economic Association, vol. 85(3), pages 600-614, June.
    31. Zeileis, Achim, 2004. "Econometric Computing with HC and HAC Covariance Matrix Estimators," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 11(i10).
    32. Susan Dynarski, 2002. "The Behavioral and Distributional Implications of Aid for College," American Economic Review, American Economic Association, vol. 92(2), pages 279-285, May.
    33. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2005. "Evaluating the effect of education on earnings: models, methods and results from the National Child Development Survey," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(3), pages 473-512, July.
    34. David Deming & Susan Dynarski, 2009. "Into College, Out of Poverty? Policies to Increase the Postsecondary Attainment of the Poor," NBER Working Papers 15387, National Bureau of Economic Research, Inc.
    35. Christopher Avery & Thomas J. Kane, 2004. "Student Perceptions of College Opportunities. The Boston COACH Program," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 355-394, National Bureau of Economic Research, Inc.
    36. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    37. David N. F. Bell & David G. Blanchflower, 2011. "Young people and the Great Recession," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 27(2), pages 241-267.
    38. DesJardins, Stephen L. & Dundar, Halil & Hendel, Darwin D., 1999. "Modeling the College Application Decision Process in a Land-Grant University," Economics of Education Review, Elsevier, vol. 18(1), pages 117-132, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dominique J. Baker & William R. Doyle, 2017. "Impact of Community College Student Debt Levels on Credit Accumulation," The ANNALS of the American Academy of Political and Social Science, , vol. 671(1), pages 132-153, May.
    2. Chen, Qihui & Chen, Yu & Zhao, Qiran, 2020. "Impacts of boarding on primary school students’ mental health outcomes – Instrumental-Variable evidence from rural northwestern China," Economics & Human Biology, Elsevier, vol. 39(C).
    3. Benjamin T. Skinner, 2019. "Choosing College in the 2000s: An Updated Analysis Using the Conditional Logistic Choice Model," Research in Higher Education, Springer;Association for Institutional Research, vol. 60(2), pages 153-183, March.
    4. Daniel Hummel, 2020. "The effects of population and housing density in urban areas on income in the United States," Local Economy, London South Bank University, vol. 35(1), pages 27-47, February.
    5. Mikołaj Czajkowski & Tomasz Gajderowicz & Marek Giergiczny & Gabriela Grotkowska & Urszula Sztandar-Sztanderska, 2020. "Choosing the Future: Economic Preferences for Higher Education Using Discrete Choice Experiment Method," Research in Higher Education, Springer;Association for Institutional Research, vol. 61(4), pages 510-539, June.
    6. David Salomón Aké-Uitz, 2023. "Did the expansion of educational supply at higher education promote intergenerational social mobility in Mexico?/¿La expansión de la oferta educativa en la educación superior promovió la movilidad," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 38(1), pages 103-142.
    7. Skinner, Benjamin T. & Doyle, William R., 2024. "Predicting postsecondary attendance by family income in the United States using multilevel regression with poststratification," Economics of Education Review, Elsevier, vol. 99(C).
    8. repec:nbr:nberch:14968 is not listed on IDEAS
    9. Baird Matthew D. & Bozick Robert & Zaber Melanie A., 2022. "Beyond traditional academic degrees: The labor market returns to occupational credentials in the United States," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-38, January.
    10. Chen, Qihui, 2020. "Am I Late for School? Peer Effects on Delayed School Entry in Rural Northwestern China," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304415, Agricultural and Applied Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pedro Carneiro & James J. Heckman & Edward J. Vytlacil, 2011. "Estimating Marginal Returns to Education," American Economic Review, American Economic Association, vol. 101(6), pages 2754-2781, October.
    2. Gaurab Aryal & Manudeep Bhuller & Fabian Lange, 2022. "Signaling and Employer Learning with Instruments," American Economic Review, American Economic Association, vol. 112(5), pages 1669-1702, May.
    3. Ge, Suqin, 2013. "Estimating the returns to schooling: Implications from a dynamic discrete choice model," Labour Economics, Elsevier, vol. 20(C), pages 92-105.
    4. Pedro Carneiro & Sokbae (Simon) Lee, 2005. "Ability, sorting and wage inequality," CeMMAP working papers CWP16/05, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    5. Pedro Carneiro & Michael Lokshin & Nithin Umapathi, 2017. "Average and Marginal Returns to Upper Secondary Schooling in Indonesia," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(1), pages 16-36, January.
    6. Benjamin T. Skinner, 2019. "Choosing College in the 2000s: An Updated Analysis Using the Conditional Logistic Choice Model," Research in Higher Education, Springer;Association for Institutional Research, vol. 60(2), pages 153-183, March.
    7. Takahide Yanagi, 2019. "Inference on local average treatment effects for misclassified treatment," Econometric Reviews, Taylor & Francis Journals, vol. 38(8), pages 938-960, September.
    8. Shoya Ishimaru, 2024. "Empirical Decomposition of the IV-OLS Gap with Heterogeneous and Nonlinear Effects," The Review of Economics and Statistics, MIT Press, vol. 106(2), pages 505-520, March.
    9. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2006. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 7, pages 307-458, Elsevier.
    10. Kédagni, Désiré, 2023. "Identifying treatment effects in the presence of confounded types," Journal of Econometrics, Elsevier, vol. 234(2), pages 479-511.
    11. Zimmerman, Seth D., 2011. "The Returns to Four-Year College for Academically Marginal Students," IZA Discussion Papers 6107, Institute of Labor Economics (IZA).
    12. Oussama Ben Atta, 2022. "University proximity at teenage years and educational attainment," French Stata Users' Group Meetings 2022 02, Stata Users Group.
    13. Ehrenberg, R.G.Ronald G., 2004. "Econometric studies of higher education," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 19-37.
    14. George Abuchi Agwu & Oussama Ben Atta, 2021. "University proximity at teenage years and educational attainment," Working papers of Transitions Energétiques et Environnementales (TREE) hal-03492963, HAL.
    15. Somani, Ravi, 2021. "The returns to higher education and public employment," World Development, Elsevier, vol. 144(C).
    16. Denzler, Stefan & Wolter, Stefan C., 2011. "Too Far to Go? Does Distance Determine Study Choices?," IZA Discussion Papers 5712, Institute of Labor Economics (IZA).
    17. Cellini, Stephanie Riegg & Chaudhary, Latika, 2014. "The labor market returns to a for-profit college education," Economics of Education Review, Elsevier, vol. 43(C), pages 125-140.
    18. Carneiro, Pedro & Lee, Sokbae, 2009. "Estimating distributions of potential outcomes using local instrumental variables with an application to changes in college enrollment and wage inequality," Journal of Econometrics, Elsevier, vol. 149(2), pages 191-208, April.
    19. Dee, Thomas S., 2004. "Are there civic returns to education?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1697-1720, August.
    20. George Abuchi Agwu & Oussama Ben Atta, 2021. "University proximity at teenage years and educational attainment," Working Papers hal-03492963, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecoedu:v:53:y:2016:i:c:p:254-267. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/econedurev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.