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Testing the validity of the compulsory schooling law instrument

Benjamin Bolzern and Martin Huber ()

No 480, FSES Working Papers from Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland

Abstract: Changes in compulsory schooling laws have been proposed as an instrument for the endogenous choice of schooling. It has been argued that raising minimum schooling exogenously increases the educational attainment of a subset of pupils without directly affecting later life outcomes such as income or health. Using the method of Huber and Mellace (2015) and data from the Survey of Health, Ageing and Retirement in Europe, we jointly test random instrument assignment, weak monotonicity of education in the instrument, and the instrument exclusion restriction. The satisfaction of these restrictions permits identifying the local average treatment effect of education on those choosing more schooling as a reaction to the law change. Our results do not point to the invalidity of the schooling law instrument, though we acknowledge that even asymptotically, testing cannot detect all possible violations of instrument validity.

Keywords: instrumental variable; schooling laws; schooling reforms; treatment effects; LATE; tests (search for similar items in EconPapers)
JEL-codes: C26 I12 I21 I28 J24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu
Date: 2017-03-02
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