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Causal Returns to Schooling and Individual Heterogeneity

Friedhelm Pfeiffer () and Winfried Pohlmeier ()

No 6588, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, human capital investments are evaluated by assuming heterogeneous returns to schooling. We use the potential outcome approach to measure the causal effect of human capital investments on earnings as a continuous treatment effect. Empirical evidence is based on a sample of West German full-time employed males (BIBB/IAB survey on educational and vocational attainment and career 1998/99). Our estimate of the average partial effect (APE) of an additional year of schooling amounts to 8.7%, which is higher than OLS estimates and quite similar to conventional instrumental variable estimates.

Keywords: returns to schooling; human capital; heterogeneity (search for similar items in EconPapers)
JEL-codes: J21 J24 J31 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-05
New Economics Papers: this item is included in nep-edu, nep-hrm, nep-lab and nep-lma
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Published in: Review of Economic and Business Studies 2011, 4 (2), 29-41

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