The German educational system is battling with a range of challenges exposed by the PISA studies and other publications such as the OECD's "Education at a glance". This dissertation discusses four distinct topics, using data from the German Socio-Economic Panel Data. In Germany, the socio-economic background of parents is strongly correlated with the educational success of children, and this correlation is stronger once children are sorted into secondary school. How large is the causal effect of socio-economic factors as parental education and family income on educational success? Does it vary over the educational career of a student? Chapter 3 attempts to answer these two specific questions by using instrumental variables to identify these causal effects at two relevant stages in the educational career of a student. A strong causal effect of both, parental education and income is found at both points in time. The effect of income is however stronger for older students, highlighting potentially the opportunity cost of staying in school longer rather than starting an apprenticeship. Chapter 4 takes advantage of regional disparities in educational policy to investigate whether these disparities have resulted in different levels of schooling achieved in the regions, and whether this difference has a causal impact on outcomes such as tertiary education, wages and labor market participation. The results show that the focus in policy in the regions can contribute to a non-negligible extent to the way students are distributed over the three main secondary school types, without affecting outcomes such as the odds of participating in tertiary education, labour market status or wages. Chapter 5 focuses on a group of workers who had a very specific educational career: they first attended the lowest type of secondary school, followed by an apprenticeship in the dual system. Those workers are particularly likely to work in jobs for which they are formally over-qualified. This perceived over-education can be explained to some extent by unobserved heterogeneity, but exploitation by training firms and consequently stigmatization on the labour market certainly play a comparatively large role when compared to workers with other educational careers. Chapter 6 considers a more general question: is more education always better, because positive spill-overs allow individuals to profit from each others' education? Exploiting the differences in the educational systems in the former German Democratic Republic and the Federal Republic of Germany the evidence for positive educational spill-overs are twofold: there seem to be positive spill-overs in regions where labour markets are fairly functional and unemployment is at a reasonable level (in our case, the West) while in areas as the East, where unemployment is high and labour markets are spill-overs seem to play no role
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