Compulsory Schooling and the Returns to Education: A Re-examination

SOAS Department of Economics Working Paper No. 199

30 Pages Posted: 12 Nov 2018

See all articles by Sophie van Huellen

Sophie van Huellen

SOAS University of London

Duo Qin

University of London - Department of Economics, SOAS

Date Written: November 12, 2018

Abstract

This paper re-examines the instrumental variable approach to estimating the effect of compulsory school law on education in the US pioneered by Angrist and Krueger (1991). We show that the approach not only yields empirically inconsistent estimates but is conceptually confused. The confusion arises from a rejection of the key causal variable as a valid conditional variable. By route of a causally explicit model design assisted by machine learning techniques, we identify the circumstances under which the wrongly rejected variable yields valid inference values. Our investigation demonstrates the importance of data-guided model selection over the choice of consistent estimators.

Keywords: instrumental variables, randomisation, research design, average return to education

JEL Classification: C26, C52, I21, I26, J24

Suggested Citation

van Huellen, Sophie and Qin, Duo, Compulsory Schooling and the Returns to Education: A Re-examination (November 12, 2018). SOAS Department of Economics Working Paper No. 199, Available at SSRN: https://ssrn.com/abstract=3282990 or http://dx.doi.org/10.2139/ssrn.3282990

Sophie Van Huellen (Contact Author)

SOAS University of London ( email )

Thornhaugh Street
Russell Square
London, WC1H 0XG
United Kingdom

Duo Qin

University of London - Department of Economics, SOAS ( email )

Thomhaugh Street
Russell Square
London, WC1H 0XG
United Kingdom

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