Do Differences in School Quality Generate Heterogeneity in the Causal Returns to Education?

35 Pages Posted: 5 May 2020 Last revised: 7 Jan 2022

See all articles by Philip DeCicca

Philip DeCicca

McMaster University - Department of Economics; Ball State--Department of Economics

Harry A. Krashinsky

University of Toronto - Centre For Industrial Relations

Date Written: May 2020

Abstract

Estimating the returns to education remains an active area of research amongst applied economists. Most studies that estimate the causal return to education exploit changes in schooling and/or labor laws to generate exogenous differences in education. An implicit assumption is that more time in school may translate into greater earnings potential. None of these studies, however, explicitly consider the quality of schooling to which impacted students are exposed. To extend this literature, we examine the interaction between school quality and policy-induced returns to schooling, using temporally-available school quality measures from Card and Krueger (1992). We find that additional compulsory schooling, via either schooling or labor laws, increases earnings only if educational inputs are of sufficiently high quality. In particular, we find a consistent role for teacher quality, as measured by relative teacher pay across states, in generating consistently positive returns to compulsory schooling.

Suggested Citation

DeCicca, Philip and DeCicca, Philip and Krashinsky, Harry A., Do Differences in School Quality Generate Heterogeneity in the Causal Returns to Education? (May 2020). NBER Working Paper No. w27089, Available at SSRN: https://ssrn.com/abstract=3592166

Philip DeCicca (Contact Author)

McMaster University - Department of Economics ( email )

Hamilton, Ontario L8S 4M4
Canada

Ball State--Department of Economics ( email )

United States

Harry A. Krashinsky

University of Toronto - Centre For Industrial Relations ( email )

121 St. George Street
Toronto M5S 2E8
Canada
(416) 978-5696 (Phone)

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