Estimating Marginal Returns to Education

Authors: Carneiro, Pedro; Heckman, James J.; Vytlacil, Edward J.

Source: The American Economic Review, Volume 101, Number 6, October 2011 , pp. 2754-2781(28)

Publisher: American Economic Association

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Abstract:

This paper estimates marginal returns to college for individuals induced to enroll in college by different marginal policy changes. The recent instrumental variables literature seeks to estimate this parameter, but in general it does so only under strong assumptions that are tested and found wanting. We show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes. Our empirical analysis shows that returns are higher for individuals with values of unobservables that make them more likely to attend college. We contrast our estimates with IV estimates of the return to schooling.

Document Type: Research article

DOI: http://dx.doi.org/10.1257/aer.101.6.2754

Publication date: 2011-10-01

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The American Economic Review is a general-interest economics journal. The journal is published quarterly and contains articles on a broad range of topics. Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession.
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