Analyzing Zero Returns to Education in Germany: Heterogeneous Effects and Skill Formation

Daniel Kamhöfer and Hendrik Schmitz

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: We analyze the causal effect of education on old-age cognitive abilities using German Socio-Economic Panel (SOEP) data and regional variation in mandatory years of schooling and the supply of schools. Our outcome variable is the score an individual reaches in an ultra-short intelligence test. We explain this score, using instrumented education. Instrumental variable estimation is necessary since on the one hand, schooling is highly affected by cognitive skills (reverse causality), and, on the other hand, both are influenced by third factors like income and health (possibly omitted variable bias). Using variations in education policy in the German federal states we are able to instrument education for three groups of students which cover all levels of educational achievement. Unlike previous studies this allows us to estimate three different local average treatment effects. The estimated effects range from 14% to 53% of a standard deviation. We find the strongest effect for students with intermediate education.

JEL-codes: C26 I21 J24 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-edu and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/79910/1/VfS_2013_pid_875.pdf (application/pdf)

Related works:
Working Paper: Analyzing Zero Returns to Education in Germany: Heterogeneous Effects and Skill Formation (2013)
Working Paper: Analyzing Zero Returns to Education in Germany – Heterogeneous Effects and Skill Formation (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79910

Access Statistics for this paper

More papers in VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().