Citation

Discussion Paper Details

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Title: Education Policy Reform and the Return to Schooling from Instrumental Variables

Author(s): Kevin Denny and Colm Harmon

Publication Date: July 2000

Keyword(s): Earnings, Education, Instrumental Variables and Ireland

Programme Area(s): Labour Economics and Public Economics

Abstract: This paper exploits an unusual policy reform that had the effect of reducing the direct cost of schooling in Ireland in the late 1960?s. This gave rise to an increased level of schooling but with effects that vary substantially across family background. This interaction of educational reform and family background generates a set of instrumental variables that are used to estimate the return to schooling allowing for the endogeneity of schooling. Using a standard Mincer type model we find a large and well-determined rate of return of around 12% which is substantially higher than the OLS estimates of around 7%.

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Bibliographic Reference

Denny, K and Harmon, C. 2000. 'Education Policy Reform and the Return to Schooling from Instrumental Variables'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2518