NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Large are the Social Returns to Education? Evidence from Compulsory Schooling Laws

Daron Acemoglu, Joshua Angrist

NBER Working Paper No. 7444
Issued in December 1999
NBER Program(s):   EFG   LS   PE

Average schooling in US states is highly correlated with state wage levels, even after controlling for the direct effect of schooling on individual wages. We use an instrumental variables strategy to determine whether this relationship is driven by social returns to education. The instrumentals for average schooling are derived from information on the child labor laws and compulsory attendance laws that affected men in our Census samples, while quarter of birth is used as an instrument for individual schooling. This results in precisely estimated private returns to education of about seven percent, and small social returns, typically less than one percent, that are not significantly different from zero.

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An data appendix is available at http://econ-www.mit.edu/faculty/angrist/data1/data/aceang00

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Document Object Identifier (DOI): 10.3386/w7444

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