Afternoon Seminars@CMIST - Michael L Smith (Economics Institute)
|Starts:||16:00 3 Feb 2015|
|Ends:||17:15 3 Feb 2015|
|What is it:||Seminar|
|Organiser:||School of Social Sciences|
|Who is it for:||University staff, Current University students, General public|
|Speaker:||Michael L Smith|
In this Afternoon Seminars@CMIST event, Michael L Smith from the Economics Institute will give a talk entitled 'Selection Bias in Heterogeneous Returns to College in Highly Stratified Educational Systems in Europe'.
All Afternoon Seminars@CMIST events are held in 2.07 HBS from 16:00 until 17:15.
All welcome, no registration required, tea and coffee provided.
Information on economic returns to college education has indisputable value for policymakers and individuals, yet standard estimates hinge on unrealistic assumptions about the homogeneity of treatment effects across the population or do not take into account differences in the backgrounds of college-goers and non-college-goers. In this paper we address those issues by using the newly developed local instrumental variable method for heterogeneous treatment effects due to unobservables presented in general form in Heckman, Urzua, and Vytlacil (2006). Estimates are performed for 28-to-38-year-olds in Austria, Czech Republic, Germany, Poland, and Slovakia (and the United Kingdom as well, as an additional point of reference) based on pooled EU-SILC data from 2005 and 2011, i.e. two waves when data on parental background were also collected. Our results reveal the presence of both positive sorting bias and negative ability bias, across countries for both men and women in most, though not all, modeled conditions. In a world of essential heterogeneity, we find that the marginal returns to education for those who achieved some kind of college degree are substantively larger than the estimated returns for those who did not go to college, as well as for estimates generated from a Mincer-type model using the same data. To understand these findings, we suggest that the highly stratified nature of the educational systems we examine has fostered mechanisms that make students more realistic about their educational and economic prospects, which may contribute to the size of positive sorting estimated.
Michael L Smith
Organisation: Economics Institute
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