Working Paper: NBER ID: w18817
Authors: Loreto Reyes; Jorge Rodríguez; Sergio S. Urzúa
Abstract: We analyze the economic returns to different postsecondary degrees in Chile. We posit a schooling decision model with unobserved ability, observed test scores and labor market outcomes. We benefit from administrative records to carry out our empirical strategy. Our results show positive average returns to postsecondary degrees, especially for five-year degrees. However, we also uncover a large fraction of individuals with realized negative net returns. Although psychic benefits of postsecondary education could rationalize this result, we argue this might also suggest that individuals lack information at the time schooling decisions are made. Finally, our findings illustrate the importance of allowing for heterogeneous treatment effects when making policy recommendations.
Keywords: postsecondary education; economic returns; Chile; heterogeneous treatment effects
JEL Codes: C25; C38; I21; I24; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unobserved ability (D29) | schooling choices (I21) |
| schooling choices (I21) | labor market outcomes (J48) |
| unobserved ability (D29) | labor market outcomes (J48) |
| postsecondary degrees (I23) | economic returns (D33) |
| higher unobserved ability (D29) | higher economic returns (I26) |
| tuition costs reduction (I22) | enrollment (I23) |
| tuition costs reduction (I22) | composition effects (A30) |