TY  - JOUR
AU  - Card,David
TI  - Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7769
PY  - 2000
Y2  - June 2000
UR  - http://www.nber.org/papers/w7769
L1  - http://www.nber.org/papers/w7769.pdf
N1  - Author contact info:
David Card
Department of Economics
549 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA  94720-3880
Tel: 510/642-5222
Fax: 510/643-7042
E-Mail: card@econ.berkeley.edu
AB  - This paper reviews a set of recent studies that have attempted to measure the causal effect of education on labor market earnings by using institutional features of the supply side of the education system as exogenous determinants of schooling outcomes. A simple theoretical model that highlights the role of comparative advantage in the optimal schooling decision is presented and used to motivate an extended discussion of econometric issues, including the properties of  ordinary least squares and instrumental variables estimators.  A review of studies that have used compulsory schooling laws, differences in the accessibility of schools, and similar features as instrumental variables for completed education reveals that the resulting estimates of the return to schooling are typically as big or bigger than the corresponding ordinary least squares estimates.   One interpretation of this finding is that marginal returns to education among the low-education subgroups typically affected by supply-side innovations tend to relatively high, reflecting their high marginal costs of schooling, rather than low ability that limits their return to education.
ER  -