Interpreting Instrumental Variables Estimates of the Returns to Schooling

Jeffrey Kling

Journal of Business & Economic Statistics, 2001, vol. 19, issue 3, 358-64

Abstract: This article synthesizes economic insights from theoretical models of schooling choice based on individual benefits and econometric work interpreting instrumental variables estimates as weighted averages of individual-specific causal effects. Linkages are illustrated using college proximity to instrument for schooling. After characterizing groups differentially affected by the instrument according to family background, 1 directly compute weights underlying estimation of the overall return. In analyzing the level of schooling at which individuals change their behavior in response to the instrument, I demonstrate that this instrument has its greatest impact on the transition from high school to college. Specification robustness is also examined.

Date: 2001
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Related works:
Working Paper: Interpreting Instrumental Variables Estimates of the Returns to Schooling (2000)
Working Paper: Interpreting Instrumental Variables Estimates of the Returns to Schooling (1999)
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