Our next Workshop on Quantitative Methods in Education, Health and the Social Sciences (QMeHSS) will be next Friday, February 20th, from 11:00-12:30pm. The workshop will be led by Dr. James Heckman and John Eric Humphries from the University of Chicago. The workshop will be held in NORC conference room 344. NORC is located at 1155 E. 60th Street.
The Effects of Education on Earnings and Health
Henry Schultz Distinguished Service Professor of Economics, Department of Economics, University of Chicago
John Eric Humphries
National Science Foundation Graduate Research Fellow, PhD student, Department of Economics, University of Chicago
This paper estimates a robust dynamic model of the causal effects of different levels of schooling on earnings and health. Our framework synthesizes approaches used in the dynamic discrete choice literature with approaches standard in the reduced form literature to produce economically interpretable and policy relevant treatment effects. Ability plays an important role in explaining observed differences in earnings and health across education levels. Nonetheless, after controlling for it, there are substantial causal effects of education at all stages of schooling. Continuation values are empirically important components of estimated causal effects. There is considerable heterogeneity in the effects of an additional year of schooling on outcomes across schooling levels and in the effects of any increment to schooling across persons. Sorting on gains is an empirically important phenomenon but only at higher levels of schooling. Estimates of causal effects using standard instrumental variables are quite different from economically interpretable and policy relevant treatment effects. The estimated causal effects of education are moderated by cognitive and noncognitive skills.