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The Long-Run Education Cost of World War II. Example of Local Average Treatment Effect Estimation

Author

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  • Ichino, A.
  • Winter-Ebmer, R.

Abstract

An important component of the long-run cost of a war is the loss of human capital suffered by children in schooling age who receive less education because of the war. This paper shows that in the European countries involved in WWII, children who were ten years old during the conflict were significantly less likely to proceed into higher education. On the contrary, we find no effect for individuals in the same cohorts living in countries not involved in the war. Using data for Austria, Germany, Sweden and Switzerland, we estimate the cost of the war in terms of earning losses suffered by those individuals who did not reach higher education because of the conflict and we compute the implied loss of GDP for their countries. In order to identify this cost, we interpret our Instrumental Variable estimates as measures of the Local Average Treatment Effects (Angrist and Imbens, 1994) of education connected to our war instruments. Inasmuch as WWII has caused an increase of liquidity constraints for families with children in schooling age (e.g. the absence of the father), our estimates may be considered as measures of the long-lasting income losses that could be avoided in peaceful times by exogenously increasing the educational attainment of children in families subject to constraints similar to those caused by the war (e.g. families with single mothers).

Suggested Citation

  • Ichino, A. & Winter-Ebmer, R., 1998. "The Long-Run Education Cost of World War II. Example of Local Average Treatment Effect Estimation," Economics Working Papers eco98/10, European University Institute.
  • Handle: RePEc:eui:euiwps:eco98/10
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    Cited by:

    1. Salvanes, Kjell G & Aakvik, Arild & Vaage, Kjell, 2003. "Measuring Heterogeneity in the Returns to Education in Norway Using Educational Reforms," CEPR Discussion Papers 4088, C.E.P.R. Discussion Papers.
    2. Ichino, Andrea & Winter-Ebmer, Rudolf, 1999. "Lower and upper bounds of returns to schooling: An exercise in IV estimation with different instruments," European Economic Review, Elsevier, vol. 43(4-6), pages 889-901, April.
    3. Pedro Telhado Pereira & Pedro Silva Martins, 2000. "Does education reduce wage inequality? Quantile regressions evidence from fifteen European countries," Nova SBE Working Paper Series wp379, Universidade Nova de Lisboa, Nova School of Business and Economics.
    4. Morita, Tamaki & Yamamoto, Kimika & Managi, Shunsuke, 2018. "The relationship between school-based career education and subsequent incomes: Empirical evidence from Japan," Economic Analysis and Policy, Elsevier, vol. 58(C), pages 70-87.
    5. Fersterer, Josef & Winter-Ebmer, Rudolf, 2003. "Are Austrian returns to education falling over time?," Labour Economics, Elsevier, vol. 10(1), pages 73-89, February.
    6. Fersterer, Josef & Winter-Ebmer, Rudolf, 2003. "Smoking, discount rates, and returns to education," Economics of Education Review, Elsevier, vol. 22(6), pages 561-566, December.
    7. Friedrich Schneider & Alexander F. Wagner, 2003. "Tradeable permits - Ten key design issues," Economics working papers 2003-04, Department of Economics, Johannes Kepler University Linz, Austria.
    8. de Walque, Damien, 2004. "The long-term legacy of the Khmer Rouge period in Cambodia," Policy Research Working Paper Series 3446, The World Bank.
    9. Friedrich Schneider & Alexander F. Wagner & Mathias Dufour, 2003. "Satisfaction not guaranteed-Institutions and satisfaction with democracy in Western Europe," Economics working papers 2003-03, Department of Economics, Johannes Kepler University Linz, Austria.
    10. Qi Li & Jeffrey Scott Racine, 2006. "Nonparametric Econometrics: Theory and Practice," Economics Books, Princeton University Press, edition 1, volume 1, number 8355.
    11. Friedrich Schneider & Kausik Chaudhuri & Sumana Chatterjee, 2003. "The Size and Development of the Indian Shadow Economy and a Comparison with other 18 Asian Countries: An Empirical Investigation," Economics working papers 2003-02, Department of Economics, Johannes Kepler University Linz, Austria.
    12. Andrea Ichino & Rudolf Winter-Ebmer, 2004. "The Long-Run Educational Cost of World War II," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 57-86, January.
    13. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.

    More about this item

    Keywords

    EDUCATION ; WAGES;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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