Using Geographic Variation in College Proximity to Estimate the Return to Schooling

David Card

No 4483, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A convincing analysis of the causal link between schooling and earnings requires an exogenous source of variation in education outcomes. This paper explores the use of college proximity as an exogenous determinant of schooling. Analysis of the NLS Young Men Cohort reveals that men who grew up in local labor markets with a nearby college have significantly higher education and earnings than other men. The education and earnings gains are concentrated among men with poorly-educated parents -- men who would otherwise stop schooling at relatively low levels. When college proximity is taken as an exogenous determinant of schooling the implied instrumental variables estimates of the return to schooling are 25-60% higher than conventional ordinary least squares estimates. Since the effect of a nearby college on schooling attainment varies by family background it is possible to test whether college proximity is a legitimately exogenous determinant of schooling. The results affirm that marginal returns to education among children of less-educated parents are as high and perhaps much higher than the rates of return estimated by conventional methods.

JEL-codes: I21 J24 (search for similar items in EconPapers)
Date: 1993-10
Note: LS
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Citations: View citations in EconPapers (292)

Published as Aspects of Labour Economics: Essays in Honour of John Vanderkamp, edited by Louis Christofides, E. Kenneth Grant and Robert Swindinsky. University of Toronto Press, 1995

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Working Paper: Using Geographic Variation in College Proximity to Estimate the Return to Schooling (1993)
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