How different are returns to education? Evidence from German school choices
Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
This study presents estimates of returns to post-secondary education and wage differentials among graduates fromdifferent secondary schools in Germany. I use an empirical model that captures the basic features of the German education system. It controls for selection into post-secondary education and treats latter as endogenous in the wage equation. My results show that OLS estimates are severely biased. The direction of the bias depends on the secondary school type. Annual returns to post-secondary education differ significantly: they are eight times higher for graduates from the highest secondary school than for graduates from the lowest secondary school.
Keywords: Education; endogenous switching; wage differentials (search for similar items in EconPapers)
JEL-codes: I20 J24 C35 (search for similar items in EconPapers)
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