Causal returns to education

Harry Anthony Patrinos and George Psacharopoulos

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Using 191 estimates from 145 studies across 54 countries, this paper synthesizes evidence on private returns to schooling. Quasi-experimental estimates imply an average causal return of about 10 % per year of education, with instrumental-variables (IV) estimates exceeding ordinary least squares (OLS) in roughly 80 % of cases. The IV-OLS gap is larger in lower- and middle-income countries. We interpret this pattern as reflecting high marginal returns in low-education environments and the fact that IV identifies local average treatment effects for individuals whose schooling is changed by policy variation. Schooling yields substantial earnings gains, especially when policies expand participation among constrained groups.

Keywords: returns to education; endogeneity; human capital; data set (search for similar items in EconPapers)
JEL-codes: J24 (search for similar items in EconPapers)
Pages: 5 pages
Date: 2026-04-30
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Published in International Journal of Educational Development, 30, April, 2026, 122. ISSN: 0738-0593

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https://researchonline.lse.ac.uk/id/eprint/137721/ Open access version. (application/pdf)

Related works:
Working Paper: Causal Returns to Education (2025)
Working Paper: Causal Returns to Education (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:137721

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