We estimate the effect of education on participation in criminal activity accounting for endogeneity of schooling. We first analyze the effect of schooling on incarceration using Census data and changes in state compulsory attendance laws over time as an instrument for schooling. Changes in these laws have a significant effect on educational achievement, and we reject tests for reverse causality. We find that schooling significantly reduces the probability of incarceration. Differences in educational attainment between black and white men explain 23 % of the blackwhite gap in male incarceration rates. We corroborate our findings on incarceration using FBI data on arrests that distinguish among different types of crimes. The biggest impacts of education are associated with murder, assault, and motor vehicle theft. We also examine the effect of schooling on self-reported crime in the NLSY and find that our estimates for imprisonment and arrest are caused by changes in criminal behavior and not educational differences in the probability of arrest or incarceration conditional on crime. Given the consistency of our estimates, we calculate the social savings from crime reduction associated with high school graduation among men. The externality is

This paper presents a productivity argument for investing in disadvantaged young children. For such investment, there is no equity-efficiency tradeoff.

Are There Civic Returns to Education? “…since the achievement of American Independence, the universal and ever-repeated argument in favor of Free Schools has been, that the general intelligence which they are capable of diffusing, and which can be imparted by no other human instrumentality, is indispensable to a republican form of government.” Horace Mann (1846)

Abstract: This paper investigates if decisions to drop out of high school are sub-optimal, and whether students benefit from policies, such as a minimum school leaving age, that oblige them to finish school beyond the time they choose on their own. I use changes in minimum school-leaving laws in Great Britain and Ireland, which were remarkably influential, to measure pecuniary and non-pecuniary gains from education. I find, similar to previous studies, students compelled to take an extra year of schooling experienced an average increase of 12 percent in annual earnings. I also find significant effects from education on health, leisure and labor activities, and subjective measures of well-being, which hold up against a wide array of specification checks. Comparing these estimates with intertemporal models of educational choice, the main conclusion of this paper is that it is very difficult to justify an optimal decision to drop out early without the presence of time inconsistent preferences, misguided expectations, or disutility from identifying with a social group that considers dropping out the norm. To prefer dropping out early, the one-year cost from attending school would have to exceed a dropout’s maximum lifetime annual earnings by a factor of five to seven.

The extent to which human capital, especially schooling, contributes to social well-being and economic growth is an important question, and has been addressed in numerous research studies. The results of these studies are diverse, and hence controversial and widely debated. Evidence on this issue has important implications for public policies toward education and the optimal public/private balance in the financing of educational services. One important line of research builds on the “human capital model” developed by Becker (1964) and Mincer (1962). Here the strategy has been to empirically estimate the returns to incremental schooling largely in the form of market-valued increases in productivity associated with more schooling. The value of this increase in skills and productivity is reflected in earnings differences between identical individuals with different levels of schooling. The 40 years of research on this question has been voluminous, and only recently has a consensus emerged regarding the wage returns to schooling. 1 A second important approach is often referred to as “endogenous

Abstract: This paper studies high school dropout behavior by estimating the long-run consequences to leaving school early. I measure these consequences using changes in minimum school leaving ages – often introduced to prevent dropping out – and compare results across the United States, Canada, and the United Kingdom. Students compelled to stay in school experience substantial gains to lifetime wealth, health, and other labor market activities for all three countries, and these results hold up against a wide array of specification checks. I estimate dropping out one year later increases present value income by more than 10 times forgone earnings and more than 2 times the maximum lifetime annual wage. The one-year cost to attending high school would have to be extremely large to offset these gains under a model that views education as an investment. Other, sub-optimal, explanations for why dropouts forgo these benefits are considered.

This article presents the case for investing more in young American children who grow up in disadvantaged environments. Figure 1 graphs time series of alternative measures of the percentage of children in disadvantaged families. The percentage of children born into, or living in, nontraditional families has increased greatly in the past thirty years. 1,2 Approximately 25 % of children are now born into single parent homes. While the percentages of children living in poverty and born into poor families have fallen recently, they are still high, especially among certain subgroups. Adverse environments place children at risk for social and economic failure. The accident of birth plays a powerful role in determining adult success. 3 Many have commented on this phenomenon, and most analyses have cast the issue of assisting children from disadvantaged families as a question of fairness or social justice. This article makes a different argument. We argue that, on productivity grounds, it makes sense to invest in young children from disadvantaged environments. Substantial evidence shows that these children are more likely to commit crime, have out-of-wedlock births, and drop out of school. Early interventions that partially remediate the effects of adverse environments can reverse some of the harm of disadvantage and have a high economic return. They benefit not only the children themselves, but also their children, as well as society at large. Investing in disadvantaged young children is a rare public policy with no equity-efficiency tradeoff. It reduces the inequality associated with the accident of birth and at the same time raises the productivity of society at large.

Recent research shows that variation in teacher quality has large effects on student performance. However, this research is based entirely on student test scores. This paper evaluates teacher quality in terms of another educational outcome of great interest – graduation. Using a unique instrumental variables approach to identify teacher effects, I find that differences in teacher quality have large effects on graduation outcomes. Because teacher effects on graduation outcomes will be more pronounced for students who are on the graduation margin, the results imply an avenue through which high-quality teachers are more productive with disadvantaged students. *I would like to thank Andrew Zau and many administrators at San Diego Unified School District, in particular Karen Bachofer and Peter Bell, for assistance with data issues. I also thank Julian Betts, Julie Cullen, Yixiao Sun, Nora Gordon, Daniel Millimet and participants at the UCSD applied seminar for useful comments and suggestions and the Spencer Foundation for research support. The underlying project that provided the data for this study has been funded by

Adoption of innovations by firms and workers is an important part of the process of technological change. Many prior studies find that highly educated workers tend to adopt new technologies faster than those with less education. Such a positive correlation between the level of education and the rate of technology adoption, however, does not necessarily reflect the true causal effect of education on technology adoption. Relying on data from the Workplace and Employee Survey (WES) (1999-2004), this study assesses the causal effects of education on technology adoption by using instrumental variables for schooling derived from Canadian compulsory school attendance laws. WES is an employer-employee linked panel data set, which provides rich information on firms and workers, including not only information on computer use, but also general information on technology adoption. We find that education increases the probability of using computer in the job. We also find that employees with more education possess longer work experiences in using computer, and are more likely to experience upgrade in computer-controlled or computer-assisted technology and experience upgrade in technological device than those with less education. Findings from this study not only shed light on the causal relationships between education and technology adoption, but also contribute to the growing literature on the private and social benefits of education.

The Centre for the Economics of Education is an independent research centre funded by the Department for Children, Schools and Families. The views expressed in this work are those of the author and do not reflect the views of the DCSF. All errors and omissions remain the authors. Executive summary A recent development in the economics literature makes use of natural experiments such as educational reforms in order to causally identify returns to education (both pecuniary and non-pecuniary). One of the reforms used in the literature is the Swedish compulsory school reform, that in the 1950s and 60s extended compulsory education from seven to nine years. The reform was rolled out gradually across the country’s municipalities, and this design has inspired researchers to use the variation over time and across regions in a differences-indifferences approach in order to estimate the effect of education on different outcomes. This paper provides a guide to researchers who are interested in the Swedish compulsory school reform: it describes the institutional context and the introduction of the reform, discusses the data sources available for quantitative analysis of reform effects, performs some baseline empirical analysis and tests as to whether the reform is a valid instrument for education.