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Estimates of the causal effects of education on earnings over the lifecycle with cohort effects and endogenous education

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  • Giuseppe Migali
  • Ian Walker

Abstract

This paper acknowledges that the relationship between log wages and schooling is considerably more complex than the simple human capital earnings function suggests and that schooling is endogenous. We estimate a model where educational attainment is discrete and ordered and log wages are determined by a simple function of work experience for each level of attainment. We distinguish between lifecycle and cohort effects by exploiting the fact that we have a short panel. We strongly reject both the usual separability assumption and exogeneity of educational attainment.

Suggested Citation

  • Giuseppe Migali & Ian Walker, 2011. "Estimates of the causal effects of education on earnings over the lifecycle with cohort effects and endogenous education," Working Papers 2248796, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:2248796
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    References listed on IDEAS

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    Cited by:

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    2. Giampaolo Arachi & Michele G Giuranno & Paola Profeta, 2018. "Introduction to the Special Issue ‘Inequality and Public Policies’, CESifo Economic Studies 2018," CESifo Economic Studies, CESifo Group, vol. 64(3), pages 339-344.
    3. Kleibrink, Jan & Michaelsen, Maren M., 2012. "Reaching High: Occupational Sorting and Higher Education Wage Inequality in the UK," Ruhr Economic Papers 377, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Migali, Giuseppe, 2012. "Funding higher education and wage uncertainty: Income contingent loan versus mortgage loan," Economics of Education Review, Elsevier, vol. 31(6), pages 871-889.
    5. Abrar ul haq, Muhammad & Mehtab, Nadia & Khan, Tasneem, 2012. "Gender Disparity in Economic Returns to Higher Education: Evidence from Private Formal Sector of Bahawalpur (Pakistan)," MPRA Paper 62958, University Library of Munich, Germany, revised 2012.

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    More about this item

    Keywords

    Returns to education; Selection; Lifecycle; Cohort;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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