The Effects of School and Family Characteristics on the Return to Education

We measure the effects of parental education on the education profile of wages. The analysis uses sibling pairs from the Panel Study of Income Dynamics and the National Longitudinal Surveys of Labor Market Experience of Young Men and Young Women. We also use the variance across siblings in school characteristics to estimate the effects of school inputs on wages holding family background constant. We obtained mixed evidence on whether parental education raises the return to education. We find that teacher's salary, expenditures per pupil, and a composite index of school quality measures have a substantial positive effect on the wages of high school graduates.