Further Analysis of the Returns to Academic and Vocational Qualifications*
| DOI | http://doi.org/10.1111/j.1468-0084.2006.00160.x |
| Published date | 01 April 2006 |
| Date | 01 April 2006 |
| Author | Steven Mcintosh |
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Further Analysis of the Returns to Academic
and Vocational Qualifications*
Steven Mcintosh
Centre for Economic Performance, London School of Economics, London, UK
(e-mail: s.mcintosh@lse.ac.uk)
Abstract
This paper uses data from the Labour Force Survey over the period 1996–
2002 to investigate the returns to a detailed list of academic and vocational
qualifications. In particular, the analysis focuses on how these returns have
varied over the time period considered, how the returns vary over an
individual’s lifetime using a pseudo cohort analysis, and how the returns vary
according to the highest level of qualification obtained at school.
I. Introduction
This paper presents an analysis of the returns to education in Britain. As such,
this is far from an original idea,
1
with rates of return analyses in particular, and
wage equations in general, being one of the most estimated relationships in the
economics literature. There are two ways in which value can be added to this
literature. The first is to refine the estimated returns, evaluating and removing
biases that may be caused principally by the endogenous nature of education
choices.
2
Traditionally, the most common methodology adopted to correct for
such biases has been an instrumental variables approach, isolating exogenous
*The data for this study were supplied by the ESRC Data Archive at the University of Essex. The
study was funded by the Department for Education and Skills. The views expressed are, however, the
author’s own. The paper benefited from the helpful suggestions of two anonymous referees.
JEL Classification numbers: J24, J31.
1
Estimates of the returns to education in the UK are widespread in the literature. See for example,
amongst many others, Harmon and Walker (1995, 1999, 2000), Schmitt (1995), Harkness and
Machin (1999), Blundell et al. (2000), and Walker and Zhu (2001).
2
Good surveys of this literature can be found in Card (1999) and Blundell, Dearden and Sianesi
(2005).
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 68, 2 (2006) 0305-9049
225
ÓBlackwell Publishing Ltd, 2006. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK
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