Working Paper: NBER ID: w27089
Authors: Philip Decicca; Harry Krashinsky
Abstract: Estimating the returns to education remains an active area of research amongst applied economists. Most studies that estimate the causal return to education exploit changes in schooling and/or labor laws to generate exogenous differences in education. An implicit assumption is that more time in school may translate into greater earnings potential. None of these studies, however, explicitly consider the quality of schooling to which impacted students are exposed. To extend this literature, we examine the interaction between school quality and policy-induced returns to schooling, using temporally-available school quality measures from Card and Krueger (1992). We find that additional compulsory schooling, via either schooling or labor laws, increases earnings only if educational inputs are of sufficiently high quality. In particular, we find a consistent role for teacher quality, as measured by relative teacher pay across states, in generating consistently positive returns to compulsory schooling.
Keywords: school quality; returns to education; compulsory schooling laws; teacher quality
JEL Codes: I26; J24; J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Educational attainment (I21) | Earnings (J31) |
| Pupil-teacher ratios (A21) | Returns to schooling (I26) |
| School term lengths (I21) | Returns to schooling (I26) |
| School quality (relative teacher pay) (I24) | Returns to education (I26) |
| School quality (teacher quality) (I21) | Returns to compulsory schooling (I26) |
| Returns to schooling (high teacher pay) (I21) | Earnings (J31) |
| Returns to schooling (low teacher pay) (I21) | Earnings (J31) |
| Compulsory schooling laws (CSLs) (J88) | Educational attainment (I21) |
| Child labor laws (CLLs) (J88) | Educational attainment (I21) |