Compulsory Schooling and Returns to Education: A Re-Examination
This paper re-examines the instrumental variable (IV) approach to estimating returns to education by use of compulsory school law (CSL) in the US. We show that the IV-approach amounts to a change in model specification by changing the causal status of the variable of interest. From this perspective,...
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Format: | Article |
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MDPI AG
2019-09-01
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Series: | Econometrics |
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Online Access: | https://www.mdpi.com/2225-1146/7/3/36 |
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author | Sophie van Huellen Duo Qin |
author_facet | Sophie van Huellen Duo Qin |
author_sort | Sophie van Huellen |
collection | DOAJ |
description | This paper re-examines the instrumental variable (IV) approach to estimating returns to education by use of compulsory school law (CSL) in the US. We show that the IV-approach amounts to a change in model specification by changing the causal status of the variable of interest. From this perspective, the IV-OLS (ordinary least square) choice becomes a model selection issue between non-nested models and is hence testable using cross validation methods. It also enables us to unravel several logic flaws in the conceptualisation of IV-based models. Using the causal chain model specification approach, we overcome these flaws by carefully distinguishing returns to education from the treatment effect of CSL. We find relatively robust estimates for the first effect, while estimates for the second effect are hindered by measurement errors in the CSL indicators. We find reassurance of our approach from fundamental theories in statistical learning. |
first_indexed | 2024-04-13T08:16:15Z |
format | Article |
id | doaj.art-d529c8866cac4fd599b7c266d9c393a6 |
institution | Directory Open Access Journal |
issn | 2225-1146 |
language | English |
last_indexed | 2024-04-13T08:16:15Z |
publishDate | 2019-09-01 |
publisher | MDPI AG |
record_format | Article |
series | Econometrics |
spelling | doaj.art-d529c8866cac4fd599b7c266d9c393a62022-12-22T02:54:46ZengMDPI AGEconometrics2225-11462019-09-01733610.3390/econometrics7030036econometrics7030036Compulsory Schooling and Returns to Education: A Re-ExaminationSophie van Huellen0Duo Qin1SOAS University of London, Thornhaugh Street, Russell Square, London WC1H 0XG, UKSOAS University of London, Thornhaugh Street, Russell Square, London WC1H 0XG, UKThis paper re-examines the instrumental variable (IV) approach to estimating returns to education by use of compulsory school law (CSL) in the US. We show that the IV-approach amounts to a change in model specification by changing the causal status of the variable of interest. From this perspective, the IV-OLS (ordinary least square) choice becomes a model selection issue between non-nested models and is hence testable using cross validation methods. It also enables us to unravel several logic flaws in the conceptualisation of IV-based models. Using the causal chain model specification approach, we overcome these flaws by carefully distinguishing returns to education from the treatment effect of CSL. We find relatively robust estimates for the first effect, while estimates for the second effect are hindered by measurement errors in the CSL indicators. We find reassurance of our approach from fundamental theories in statistical learning.https://www.mdpi.com/2225-1146/7/3/36instrumental variablesrandomisationresearch designaverage return to education |
spellingShingle | Sophie van Huellen Duo Qin Compulsory Schooling and Returns to Education: A Re-Examination Econometrics instrumental variables randomisation research design average return to education |
title | Compulsory Schooling and Returns to Education: A Re-Examination |
title_full | Compulsory Schooling and Returns to Education: A Re-Examination |
title_fullStr | Compulsory Schooling and Returns to Education: A Re-Examination |
title_full_unstemmed | Compulsory Schooling and Returns to Education: A Re-Examination |
title_short | Compulsory Schooling and Returns to Education: A Re-Examination |
title_sort | compulsory schooling and returns to education a re examination |
topic | instrumental variables randomisation research design average return to education |
url | https://www.mdpi.com/2225-1146/7/3/36 |
work_keys_str_mv | AT sophievanhuellen compulsoryschoolingandreturnstoeducationareexamination AT duoqin compulsoryschoolingandreturnstoeducationareexamination |