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Education Policy Reform and the Return to Schooling from Instrumental Variabes

Author

Listed:
  • Kevin J. Denny

    (University College Dublin)

  • Colm P. Harmon

    (University College Dublin)

Abstract

We exploit an unusual policy reform which had the effect of reducing the direct cost of schooling in Ireland in the early 1970's. This gave rise to an increased level of schooling but with effects that vary across family background. This interaction generates a set of instrumental variables which we use to estimate the return to schooling allowing for the endogeneity of schooling. We find a large and well determined in the rate of return of the order of 11 or 12% substantially higher than the OLS estimates of around 7%.

Suggested Citation

  • Kevin J. Denny & Colm P. Harmon, 2000. "Education Policy Reform and the Return to Schooling from Instrumental Variabes," Econometric Society World Congress 2000 Contributed Papers 1422, Econometric Society.
    • Handle: RePEc:ecm:wc2000:1422
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    References listed on IDEAS

    as
    1. 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.
    2. Isaac C. Rischall, "undated". "The Roles of Education, Skill and Parental Income in Determining Wages," Canadian International Labour Network Working Papers 29, McMaster University.
    3. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    4. Colm Harmon; & Ian Walker, 1995. "Estimates of Economic Return to Schooling in the UK," Economics Department Working Paper Series n540195, Department of Economics, National University of Ireland - Maynooth.
    5. Callan, Tim & Harmon, Colm, 1999. "The economic return to schooling in Ireland," Labour Economics, Elsevier, vol. 6(4), pages 543-550, November.
    6. 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..
    7. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-446, March.
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    9. Kevin Denny & Harmon, Harmon & Sandra Redmond, 2000. "Functional literacy, educational attainment and earnings - evidence from the international adult literacy survey," IFS Working Papers W00/09, Institute for Fiscal Studies.
    10. Ashenfelter, Orley & Harmon, Colm & Oosterbeek, Hessel, 1999. "A review of estimates of the schooling/earnings relationship, with tests for publication bias," Labour Economics, Elsevier, vol. 6(4), pages 453-470, November.
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    12. Denny, K.J. & Harmon, C.P. & Redmond, S., 2000. "Cognitive Skills, Educational Attainment and Earnings -Evidence from the International Adult Literacy Survey," Papers 00/04, College Dublin, Department of Political Economy-.
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    14. Callan, Tim & Wren, Anne, 1994. "Male-Female Wage Differentials: Analysis and Policy Issues," Research Series, Economic and Social Research Institute (ESRI), number GRS163.
    15. Kevin Denny & Colm Harmon & Dorren McMahon & Sandra Redmond, 1999. "Literacy and Education in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 30(3), pages 215-226.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • C00 - Mathematical and Quantitative Methods - - General - - - General

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