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Cohort effects and the returns to education in West Germany

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Using a Mincer-type wage function, we estimate cohort effects in the returns to education for West German workers born between 1925 and 1974. The main problem to be tackled in the specification is to separately identify cohort, experience, and possibly also age and year effects in the returns. For women, we find a large and robust decline in schooling premia: In the private sector, the returns to a further year of post-compulsory education fell from ten per cent for the 1945–49 cohort to about six per cent for those born in the early 1970s. Cohort effects in men's returns to education are less obvious, but we do find evidence that they, too, have declined. We conclude by identifying possible reasons for the decline.

Document Type: Research Article


Affiliations: 1: Centre for European Economic Research (ZEW), Mannheim, Germany 2: Free University of Berlin, DIW Berlin, IZA Bonn

Publication date: June 10, 2006

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