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.
Authors
Research Fellow University College London
Pedro is a Professor of Economics at University College London and an economist in the IFS' Centre for Microdata Methods and Practice (cemmap).
Research Associate University of Chicago
James is a Research Associate of the IFS and the Henry Schultz Distinguished Service Professor of Economics at the University of Chicago.
NYU
Journal article details
- DOI
- 10.1257/aer.101.6.2754
- Publisher
- American Economic Association
- Issue
- Volume 101, Issue 6, October 2011
Suggested citation
P, Carneiro and J, Heckman and E, Vytlacil. (2011). 'Estimating marginal returns to education' 101(6/2011)
More from IFS
Understand this issue
What are the challenges in getting debt on a falling path?
28 June 2024
Election Special: Your questions answered
27 June 2024
What is the two-child limit in benefits?
27 June 2024
Policy analysis
How would the parties’ tax and spending plans affect Scotland and Wales?
28 June 2024
Free breakfast clubs in schools: what Labour’s plans would mean for pupils and families
25 June 2024
What are the parties’ plans for benefits and taxes?
24 June 2024
Academic research
Fiscal Studies: Volume 45, Issue 2
28 June 2024
Income inequality in Ireland, 1987–2019
28 June 2024
Inequality in Denmark, 1987–2021
28 June 2024