Estimating the Economic Return to Schooling on the Basis of Panel Data

Posted: 29 Jan 1997

See all articles by Adriaan Kalwij

Adriaan Kalwij

IZA Institute of Labor Economics

Date Written: June 1996

Abstract

This paper is concerned with estimating the economic return to schooling of men in the Netherlands. We adopt an IV approach to estimate a panel data model with random individual effects. We exploit the fact that older individuals have relatively less schooling compared to younger individuals to construct instruments and include GNP per worker at the time an individual turned 16 to control for birth-cohort effects. The estimated return to schooling is about 15%. Ignoring the endogeneity of schooling results in a lower return to schooling. Ignoring birth-cohort effects results in a lower return to work experience.

JEL Classification: I29, J31

Suggested Citation

Kalwij, Adriaan S., Estimating the Economic Return to Schooling on the Basis of Panel Data (June 1996). Available at SSRN: https://ssrn.com/abstract=3683

Adriaan S. Kalwij (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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