Monetary returns to upper secondary schooling, the evolution of unobserved heterogeneity, and implications for employer learning

Anna Krumme and Matthias Westphal

No 1130, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: We study the evolution of monetary returns to high school education and their heterogeneity after the labor market entry using linked survey and administrative labor market data from Germany. By exploiting academic track school openings for cohorts from 1950–1985, we find sizeable monetary returns of 14–17% per year of additional schooling within the first 10 years of labor market experience. Whereas unobserved heterogeneity in the returns is initially uncorrelated with the schooling decision, the correlation starts evolving at higher levels of labor market experience. We interpret this finding considering employer learning – so far unconsidered in the literature.

Keywords: Returns to education; IV estimation; marginal treatment effects; unobserved heterogeneity; employer learning (search for similar items in EconPapers)
JEL-codes: C26 I26 J24 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:311301

DOI: 10.4419/96973312

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