What determines the return to education: An extra year or hurdle cleared?

The 1973 Raising of the School Leaving Age in England and Wales has been used to identify returns to years’ schooling. However, the reform affected the proportion with qualifications, as well as schooling length. To shed light on whether the returns reflect extra schooling or qualifications, we exploit another institutional rule – the Easter Leaving Rule – to obtain unbiased estimates of the effect of qualifications. We find sizeable returns to academic qualifications – increasing the probability of employment by 40 percentage points. This is more than 70% of the estimated return based on RoSLA, suggesting that qualifications drive most – but not all – of the returns to education.Returns to education; RoSLA; qualifications

Gaining more education does lead to higher wages

Economists have long been asking whether increasing education leads to higher wages. In his recently published work, Matt Dickson exploits the relationship between smoking as a teenager and education choice to tease out the causal relationship. He finds that, across the distribution of education levels and the ability range, getting more education does result in a higher wage. For policy, this means that raising the participation age is a good move and – if properly enforced – should lead to tangible benefits for those affected

The effect of education participation on youth custody: causal evidence from England

The negative relationship between education and crime is well documented for many coun- tries. In England, continued participation in education beyond the compulsory minimum school leaving age of 16 is strongly associated with a lower probability of experiencing custody in later teenage years, however the non-random selection of young people into continued participation means cross-sectional estimates of the relationship are likely to contain considerable bias. This paper estimates the causal effect of continuing in education post-16 on the probability of expe- riencing youth custody at ages 17 and 18, addressing the endogeneity of continued participation by exploiting the natural experiment created by the ‘raising of the participation age’ in England in 2012/13. Unlike previous cohorts who could leave education aged 16, young people starting the final year of compulsory schooling in September 2012 were required to remain in education or training until the end of the school year in which they turned 17, and those starting the final year in September 2013 were required to remain in education or training until age 18. Using this exogenous variation in participation between cohorts we estimate the causal effect of continued participation on custody outcomes at ages 17 and 18 using Two-Stage Least Squares and Re- gression Discontinuity methods. The effect of the law change was to increase the proportion of young people participating in education at age 17 by 1.7pp (1.2pp) for boys (girls), from a base of 82.1% (85.0%) immediately prior to the reform. Despite this increase in participation, there was no identified effect on the probability of custody when aged 17 or 18. This suggests that the 0.64pp (0.04pp) reduction in probability of custody associated with continued participation for boys (girls) estimated by OLS is driven by selection. Results are robust to estimation method and whether the treatment is participation in education or training, participation in school, years of post-16 education or training or years of post-16 schooling

The effect of education participation on youth custody: causal evidence from England

The negative relationship between education and crime is well documented for many coun- tries. In England, continued participation in education beyond the compulsory minimum school leaving age of 16 is strongly associated with a lower probability of experiencing custody in later teenage years, however the non-random selection of young people into continued participation means cross-sectional estimates of the relationship are likely to contain considerable bias. This paper estimates the causal effect of continuing in education post-16 on the probability of expe- riencing youth custody at ages 17 and 18, addressing the endogeneity of continued participation by exploiting the natural experiment created by the ‘raising of the participation age’ in England in 2012/13. Unlike previous cohorts who could leave education aged 16, young people starting the final year of compulsory schooling in September 2012 were required to remain in education or training until the end of the school year in which they turned 17, and those starting the final year in September 2013 were required to remain in education or training until age 18. Using this exogenous variation in participation between cohorts we estimate the causal effect of continued participation on custody outcomes at ages 17 and 18 using Two-Stage Least Squares and Re- gression Discontinuity methods. The effect of the law change was to increase the proportion of young people participating in education at age 17 by 1.7pp (1.2pp) for boys (girls), from a base of 82.1% (85.0%) immediately prior to the reform. Despite this increase in participation, there was no identified effect on the probability of custody when aged 17 or 18. This suggests that the 0.64pp (0.04pp) reduction in probability of custody associated with continued participation for boys (girls) estimated by OLS is driven by selection. Results are robust to estimation method and whether the treatment is participation in education or training, participation in school, years of post-16 education or training or years of post-16 schooling

The Causal Effect of Education on Wages Revisited

This paper estimates the return to education using two alternative instrumental variable estimators: one exploits variation in schooling associated with early smoking behaviour, the other uses the raising of the minimum school leaving age. Each instrument estimates a 'local average treatment effect' and my motivation is to analyse the extent to which these differ and which is more appropriate for drawing conclusions about the return to education in Britain. I implement each instrument on the same data from the British Household Panel Survey, and use the over-identification to test the validity of my instruments. I find that the instrument constructed using early smoking behaviour is valid as well as being strong, and argue that it provides a better estimate of the average effect of additional education, akin to ordinary least squares but corrected for endogeneity. I also exploit the dual sources of exogenous variation in schooling to derive a further IV estimate of the return to schooling. I find the OLS estimate to be considerably downward biased (around 4.6%) compared with the IV estimates of 12.9% (early smoking), 10.2% (RoSLA) and 12.5% (both instruments).human capital, endogeneity, local average treatment effect

Employment, Family Union, and Childbearing Decisions in Great Britain

The paper investigates the relationship between work and family life in Britain. Using appropriate statistical techniques we estimate a five-equation model, which includes birth events, union formation, union dissolution, employment and non-employment events. The model allows for unobserved heterogeneity that is correlated across all five equations. We use information from the British Household Panel Survey, including the retrospective histories concerning work, union, and child bearing, to estimate this model. We obtain well-defined parameter estimates, including significant and correlated unobserved heterogeneity. We find that transitions in and out of employment for men are relatively independent of other transitions. In contrast, there are strong links between female employment, having children and union formation. By undertaking a detailed micro simulations analysis, we show that different levels of female labour force participation do not necessarily lead to large changes in fertility levels. Changes in union formation and fertility levels, on the other hand, do have a significant impact on employment rates.demographic transitions, marriage, divorce, birth, employment

Modelling poverty by not modelling poverty: An application of a simultaneous hazards approach to the UK

We pursue an economic approach to analysing poverty. This requires a focus on the variables that individuals can influence, such as forming or dissolving a union or having children. We argue that this indirect approach to modelling poverty is the right way to bring economic tools to bear on the issue. In our implementation of this approach, we focus on endogenous demographic and employment transitions as the driving forces behind changes in poverty. We construct a dataset covering event histories over a long window and estimate five simultaneous hazards with unrestricted correlated heterogeneity. The model fits the demographic and poverty data reasonably well. We investigate the important parameters and processes for differences in individuals' poverty likelihood. Employment, and particularly employment of disadvantaged women with children, is important.poverty dynamics, poverty transitions, simultaneous hazards

Raising the age of participation in education or training to 18 in Wales

In England, the compulsory age of participation in education or training was raised to 17 in 2013 and then 18 in 2015. In Wales, Scotland, and Northern Ireland, the school leaving age is 16. The idea of raising the age of participation in education or training is gaining traction in the Scottish context, as well as in Wales. The Wales Centre for Public Policy (WCPP) conducted research for the Welsh Government to explore the implications of pursuing this policy in Wales. The research considered how RPA might interact with ongoing reforms to school age and post-16 provision in Wales, and explored alternative policies which concentrate on reducing early school leaving, as opposed to policies that legally require young people to remain in learning for longer periods of time