Working Paper: NBER ID: w16003
Authors: Costas Meghir; Steven G. Rivkin
Abstract: This paper reviews some of the econometric methods that have been used in the economics of education. The focus is on understanding how the assumptions made to justify and implement such methods relate to the underlying economic model and the interpretation of the results. We start by considering the estimation of the returns to education both within the context of a dynamic discrete choice model inspired by Willis and Rosen (1979) and in the context of the Mincer model. We discuss the relationship between the econometric assumptions and economic behaviour. We then discuss methods that have been used in the context of assessing the impact of education quality, the teacher contribution to pupils' achievement and the effect of school quality on housing prices. In the process we also provide a summary of some of the main results in this literature.
Keywords: Econometric methods; Education; Returns to education; Human capital
JEL Codes: C1; C14; H31; H52; I21; J24; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Educational attainment (I21) | Wage received (J31) |
| Model of education choice (I21) | Returns to education (I26) |
| Roy model of education decision-making (D79) | Understanding of how education impacts wages (I24) |
| Missing wage data (J31) | Biased estimates of returns to education (I26) |