Working Paper: CEPR ID: DP6679
Authors: Paul J Devereux; Robert A Hart
Abstract: Do students benefit from compulsory schooling? Researchers using changes in compulsory schooling laws as instruments have typically estimated very high returns to additional schooling that are greater than the corresponding OLS estimates and concluded that the group of individuals who are influenced by the law change have particularly high returns to education. That is, the Local Average Treatment Effect (LATE) is larger than the average treatment effect (ATE). However, studies of a 1947 British compulsory schooling law change that impacted about half the relevant population have also found very high instrumental variables returns to schooling (about 15%), suggesting that the ATE of schooling is also very high and higher than OLS estimates suggest. We utilize the New Earnings Survey Panel Data-set (NESPD), that has superior earnings information compared to the datasets previously used and find instrumental variable estimates that are small and much lower than OLS. In fact, there is no evidence of any positive return for women and the return for men is in the 4-7% range. These estimates provide no evidence that the ATE of schooling is very high.
Keywords: Compulsory Schooling; Return to Education
JEL Codes: J01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Compulsory schooling law change (I21) | OLS estimates biased upward due to selection effects (J79) |
| Compulsory schooling law change (I21) | ATE of schooling is much lower than previously thought (I21) |
| Change in compulsory schooling law in 1947 (I28) | Increase in average school leaving age (I21) |
| Change in compulsory schooling law in 1947 (I29) | Reduction in proportion of individuals leaving school before age 15 (I21) |
| Change in compulsory schooling law in 1947 (I29) | Modest positive effect on male earnings (J79) |
| Change in compulsory schooling law in 1947 (I28) | No positive return for women (J16) |