nep-edu New Economics Papers
on Education
Issue of 2011‒04‒23
fourteen papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Civic returns to education: its effect on homophobia By Kevin Denny
  2. Labour market returns to higher education in Vietnam By Doan, Tinh
  3. What determines the return to education: An extra year or hurdle cleared? By Matt Dickson; Sarah Smith
  4. Parental Education, Grade Attainment and Earnings Expectations among University Students By Delaney, Liam; Harmon, Colm P.; Redmond, Cathy
  5. New Evidence on the Causes of Educational Homogamy By Bruze, Gustaf
  6. Lifecycle Impact of Alternative Higher Education Finance Systems in Ireland By Flannery, Darragh; O'Donoghue, Cathal
  7. Progression in Higher Education: The Value of Multi-Variate Analysis By McCoy, Selina; Byrne, Delma
  8. The Value of an Educated Population for an Individual’s Entrepreneurship Success By Jose Maria Millan; Emilio Congregado; Concepcion Roman; Mirjam van Praag; Andre van Stel
  9. College Risk and Return By Gonzalo Castex
  10. The separation of lower and higher attaining pupils in the transition from primary to secondary schools: a longitudinal study of London By Richard Harris
  11. Utilising Microsimulation to Estimate New Marginal Returns to Education: Ireland 1987-2005 By Flannery, Darragh; O'Donoghue, Cathal
  12. Male and Female Marriage Returns to Schooling By Bruze, Gustaf
  13. Does Formal Education for Older Workers Increase Earnings? Analyzing Annual Data Stretching Over 25 Years By Stenberg, Anders; de Luna, Xavier; Westerlund, Olle
  14. University Graduation Dependent on Family’s Wealth, Ability and Social Status By Tim Ehlers

  1. By: Kevin Denny (School of Economics and Geary Institute, University College Dublin)
    Abstract: This paper addresses the question of whether higher levels of education contribute to greater tolerance of homosexuals. Using survey data for Ireland and exploiting a major reform to education, the abolition of fees for secondary schools in 1968, it is shown that increases in education causes individuals to be significantly more tolerant of homosexuals. Ignoring the endogeneity of education leads to much lower estimates of the effect of education. Replicating the model with data for the United Kingdom generates very similar results.
    Keywords: education, homophobia, tolerance, social returns
    Date: 2011–04–14
  2. By: Doan, Tinh
    Abstract: This paper employs the Ordinary Least Squares, Instrumental Variables and Treatment Effect models to a new dataset from the Vietnam Household Living Standards Survey (VHLSS) to estimate return to the four-year university education in 2008. Our estimates reveal that the return to university education is about 17% (annualized) and robust to the various estimators. The return to higher education has significantly increased since the economic reform in late 1980s. --
    Keywords: economic transition,returns to higher education,IV model,Vietnam
    JEL: C31 J31 O15
    Date: 2011
  3. By: Matt Dickson; Sarah Smith
    Abstract: The 1973 Raising of the School Leaving Age in England and Wales has been used to identify returns to years’ schooling. However, the reform affected the proportion with qualifications, as well as schooling length. To shed light on whether the returns reflect extra schooling or qualifications, we exploit another institutional rule – the Easter Leaving Rule – to obtain unbiased estimates of the effect of qualifications. We find sizeable returns to academic qualifications – increasing the probability of employment by 40 percentage points. This is more than 70% of the estimated return based on RoSLA, suggesting that qualifications drive most – but not all – of the returns to education.
    Keywords: Returns to education; RoSLA; qualifications
    JEL: I21 I28 J24
    Date: 2011–02
  4. By: Delaney, Liam (University College Dublin); Harmon, Colm P. (University College Dublin); Redmond, Cathy (University College London)
    Abstract: While there is an extensive literature on intergenerational transmission of economic outcomes (education, health and income for example), many of the pathways through which these outcomes are transmitted are not as well understood. We address this deficit by analysing the relationship between socio-economic status and child outcomes in university, based on a rich and unique dataset of university students. While large socio-economic differences in academic performance exist at the point of entry into university, these differences are substantially narrowed during the period of study. Importantly, the differences across socio-economic backgrounds in university grade attainment for female students is explained by intermediating variables such as personality, risk attitudes and time preferences, and subject/college choices. However, for male students, we explain less than half of the socio-economic gradient through these same pathways. Despite the weakening socio-economic effect in grade attainment, a key finding is that large socio-economic differentials in the earnings expectations of university students persist, even when controlling for grades in addition to our rich set of controls. Our findings pose a sizable challenge for policy in this area as they suggest that equalising educational outcomes may not translate into equal labour market outcomes.
    Keywords: socio-economic status, education, inequality, discrimination
    JEL: I21 J62 C81
    Date: 2011–04
  5. By: Bruze, Gustaf (Department of Economics, Aarhus School of Business)
    Abstract: Educational homogamy is an important but poorly understood source of inequality. This paper analyzes a group of men and women who do not meet their spouses in school, are not sorted by education at work, and have no financial incentives to marry educated spouses. Nevertheless, movie actors show a strong tendency to sort positively on education in marriage. These findings suggest that male and female preferences alone induce considerable sorting on education in marriage and that men and women have very strong preferences for nonfinancial partner traits correlated with years of education
    Keywords: Educational Homogamy; Sorting; Inequality; Marriage
    JEL: I21 J12
    Date: 2010–11–01
  6. By: Flannery, Darragh (University of Limerick); O'Donoghue, Cathal (Teagasc Rural Economy Research Centre)
    Abstract: With increasing numbers of young people participating in higher education in Ireland and a heavy reliance of higher education institutions on state funding, the introduction of an alternative finance system for Ireland has been muted over the past number of years. However, no study has been conducted to gauge the potential impact of such measures. In this chapter we utilize a dynamic microsimulation model developed for Ireland to simulate the impact of both an income contingent loan system (ICL) and a graduate tax system from a fiscal and redistributional viewpoint and to analyze the repayment length under the former system. Our results suggest that an ICL system would is more equitable, while the graduate tax system would be a better alternative from a fiscal viewpoint. The results also illustrate the important of the interest rate attached to any future student loan system within Ireland from a fiscal viewpoint.
    Keywords: higher education financing, dynamic microsimulation, income contingent loan, graduate tax
    JEL: I22 I28
    Date: 2011–04
  7. By: McCoy, Selina; Byrne, Delma
    Date: 2011–01
  8. By: Jose Maria Millan (University of Huelva, Spain); Emilio Congregado (University of Huelva, Spain); Concepcion Roman (University of Huelva, Spain); Mirjam van Praag (ACE, University of Amsterdam); Andre van Stel (EIM Business and Policy Research, Zoetermeer, the Netherlands)
    Abstract: Human capital obtained through education has been shown to be one of the strongest drivers of entrepreneurship performance. The entrepreneur's human capital is, though, only one of the input factors into the production process of her venture. The value of other input factors, such as (knowledge) capital and labor is likely to be affected by the education level of the possible stakeholders in the entrepreneur’s venture. The education distribution of the (local) population may thus shape the supply function of the entrepreneur. Likewise, the demand function faced by the entrepreneur is also likely to be shaped by the taste, sophistication and thus the education level of the population in their role as consumers. In other words, a population with a higher education level may be associated with (i) a working population of higher quality; (ii) more and/or higher quality universities with a positive effect on research and development (R&D) and knowledge spillovers leading to more high tech and innovative ventures; and finally, (iii) a more sophisticated consumer market. Based on this, we formulate the following proposition: The performance of an entrepreneur is not only affected positively by her own education level but in addition, also by the education level of the population. We test this proposition using an eight years (1994-2001) panel of labor market participants in the EU-15 countries from which we select individuals who have been observed as entrepreneurs. We find strong support for a positive relationship between enrolment rates in tertiary education in country <I>j</I> and year <I>t</I> and several measures of the performance of individual entrepreneurs in that same country and year, including survival and the probability that an entrepreneur starts employing personnel and maintains as an employer for a longer period of time. An implication of our novel finding is that entrepreneurship and higher education policies should be considered in tandem with each other.
    Keywords: entrepreneurship; performance; survival; personnel; education
    Date: 2011–04–12
  9. By: Gonzalo Castex
    Abstract: Attending college is thought of as a very profitable investment decision, as its estimated annualized return ranges from 8% to 13%. However, a large fraction of high school graduates do not enroll in college. I reconcile the observed high average returns to schooling with relatively low attendance rates when considering college as a risky investment decision. A high dropout risk has two important effects on the estimated average returns to college: selection bias and risk premium. In order to explicitly consider the selection bias, I explore the dropout risk in a life-cycle model with heterogeneous ability. The risk-premium of college participation accounts for 21% of the excess returns to college education for highability students and 19% of the excess return for low-ability students. Risk averse agents are willing to reduce their return to college in order to avoid the dropout risk. The effect is not uniform across ability levels.
    Date: 2011–01
  10. By: Richard Harris
    Abstract: This paper uses methods of spatial analysis to show that lower and higher attaining pupils are separating from each other as they make the transition from primary to secondary schools in London. The observation is not simply a function of geography – that some places are more affluent, with a link between wealth and educational advantage – because separations emerge between locally competing secondary schools: those that are drawing their intakes from the same primary schools. Whilst the separations are partly exacerbated by selective and by faith schools, in all but one year during the period 2003‐8 they remain statistically significant even when those schools are omitted. However, there is no evidence to suggest the separation of lower and higher attaining pupils is getting worse or better, suggesting the geographical determinants of “choice” are strong and not easily changed.
    Keywords: primary school, secondary school, transition, London, spatial analysis
    JEL: I28
    Date: 2011–03
  11. By: Flannery, Darragh (University of Limerick); O'Donoghue, Cathal (Teagasc Rural Economy Research Centre)
    Abstract: In this paper we utilise microsimulation techniques in the form of an income generation model and a tax/benefit model to estimate both the fiscal and net private return to education at a marginal level. This is carried out empirically using Irish data across the period 1987-2005 and is the first study to utilise these techniques in such a manner. The results indicate that a more generous tax/benefit system, combined with a greater state burden of the cost of education over this period may have helped increase the individual’s return to education, while reducing the state return from investing in education. The methodology employed allows us to specifically analyse the impact of various components of the tax/benefit system upon these returns across time and show the role of income tax changes upon the return to education for the individual and the state.
    Keywords: returns to education, microsimulation, income generation model
    JEL: I22 I28
    Date: 2011–04
  12. By: Bruze, Gustaf (Department of Economics, Aarhus School of Business)
    Abstract: A collective marriage matching model is estimated and calibrated to quantify the share of returns to schooling that is realized through marriage. The predictions of the model are matched with US data on the relationship between schooling and wage rates, the division of time within the household, and the extent to which men and women sort positively on several traits in marriage. Counterfactual analysis conducted with the model, suggests that US middle aged men and women are earning in the order of 30 percent of their return to schooling through improved marital outcomes.
    Keywords: Marriage; Sorting; Returns to Education
    JEL: D10 I21 J12
    Date: 2010–11–01
  13. By: Stenberg, Anders (Swedish Institute for Social Research, Stockholm University); de Luna, Xavier (Department of Statistics, Umeå University); Westerlund, Olle (Department of Economics, Umeå University)
    Abstract: Governments in the US, Canada and Europe have expressed an ambition to stimulate education of older. In this paper, we analyze if there are effects on annual earnings of formal education for participants aged 42-55 at the time of enrolment in 1994-1995. The analysis explores longitudinal population register data stretching from 1982 to 2007. The method used is difference-in-differences propensity score matching based on a rich set of covariates, including indicators of health and labor market marginalization. Results differ from earlier studies, implying no significant average earnings effects for males, positive effects for females, although insufficient to cover total costs.
    Keywords: Adult education; Earnings; Government Expenditures; Human capital
    JEL: C21 H52 H75 I28
    Date: 2011–04–07
  14. By: Tim Ehlers
    Abstract: This paper presents a model showing an incentive for a group of people to vote for higher tuition fees, even if these fees have no quality effect. The incentive is based on a non-monetary influence on utility, namely the social status or prestige of graduating. The basic assumption is that the higher the prestige is, the lower the number of people studying. In a static equilibrium, it is shown that a group of wealthier and more able people can exist that attempts to prevent others from studying.
    JEL: I22 J24 H52
    Date: 2011–04–05

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