Journal Article

Estimating marginal returns to education

Authors

Pedro Carneiro, James Heckman, Edward Vytlacil

Published Date

30 October 2011

Type

Journal Article

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.


Previous version

Estimating marginal returns to education
Pedro Carneiro, James Heckman, Edward Vytlacil
CWP29/10