The impact of education on earnings over the life cycle is a critical factor for policy decisions ranging from education to taxation and pensions. This column exploits a unique Norwegian population panel data set to estimate an internal rate of return to additional schooling of about 10%. The standard Mincer-regression approach is also shown to substantially underestimate schooling’s rate of return.
Manudeep Bhuller, Magne Mogstad, Kjell G. Salvanes, Monday, September 22, 2014
Fabrice Murtin, Martina Viarengo , Friday, January 18, 2013
A workforce’s cognitive skills and ability to learn are regarded as crucial factors for countries hoping to develop and become competitive in the global knowledge economy. This column argues that many developing countries‘ basic educational attainment and learning outcomes remain wanting. Taking a look at Europe’s historical record can shed light on the developing-country context, and evidence suggests that simply expanding an ill-functioning educational system will be wasteful. It’s advisable for policymakers to pursue institutional reform aimed at cost-efficiency before they begin implementing school reforms.