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This paper estimates the marginal returns to college for individuals induced to enroll in college by different marginal policy changes. The recent instrumental variables literature seeks to estimate this parameter, but in general it does so only under strong assumptions that are tested and found wanting. We show how to utilize economic theory and local instrumental variables estimators to estimate the effect of marginal policy changes. Our empirical analysis shows that returns are higher for individuals more likely to attend college. We contrast the returns to well-defined marginal policy changes with IV estimates of the return to schooling. Some marginal policy changes inducing students into college produce very low returns.

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The large increase in computer use has raised the question whether people have to be taught computer skills before entering the labour market. Using data from the 1997 Skills Survey of the Employed British Workforce, we argue that neither the increase in computer use nor the fact that particularly higher skilled workers use a computer provides evidence that computer skills are valuable. We compare computer skills with writing and math skills and test whether wages vary with computer skills, given the specific use that is made of computers. The regression results show that while the ability to write documents and to carry out mathematical analyses yields significant labour-market returns, the ability to effectively use a computer has no substantial impact on wages. These estimates suggest that writing and math can be regarded as basic skills, but that the higher wages of computer users are unrelated to computer skills.

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This paper integrates two strands of literature on overskilling and disability using the 2004 British Workplace Employment Relations Survey (WERS). It finds that the disabled are significantly more likely to be mismatched in the labour market, to suffer from a pay penalty and to have lower job satisfaction, the effects being stronger for the work-limited disabled. Giving workers more discretion over how they perform their work would significantly reduce these negative effects.

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We consider the effect of legal access to alcohol, which is known to increase drinking behavior, on academic performance. We first estimate the effect using an [regression discontinuity] RD design but argue that this approach is not well-suited to the research question in our setting. Our preferred approach instead exploits the longitudinal nature of the data, essentially identifying the effect by comparing a student's academic performance before and after turning 21. We find that students' grades fall below their expected levels upon being able to drink legally, but by less than previously documented. We also show that there are effects on women and that the effects are persistent. The main results are robust to the inclusion of individual fixed effects, individual trends, and individual quadratics, in addition to other controls, that account for the expected evolution of performance as students make progress towards their degrees.

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Using American panel data from the National Educational Longitudinal Study of 1988 (NELS:88) this paper investigates the effect of working during grade 12 on attainment. We exploit the longitudinal nature of the NELS by employing, for the first time in the related literature, a semiparametric propensity score matching approach combined with difference-in-differences. This identification strategy allows us to address in a flexible way selection on both observables and unobservables associated with part-time work decisions. Once such factors are controlled for, insignificant effects on reading and math scores are found. We show that these results are robust to a matching approach combined with difference-in-difference-in-differences which allows differential time trends in attainment according to the working status in grade 12.

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This study attempts to explain why the transition to a market economy is skill-biased. It shows unequivocal evidence on increased skill wage premium and supply of skills in transition economies. It examines whether similar skill-favouring shifts in the Russian and US economies are driven by the same set of factors. [The] analysis elaborates on the model of alternative theories of the increased wage skill premium and then evaluates three main hypotheses: skill-biased technological change, the market adjustment hypothesis, and the institutional factor hypothesis. To test these hypotheses, the study uses unique linked employer-employee data that spans the 16 years of the Soviet and transition periods in Russia (1985-2000), with a special emphasis on data quality, measurement errors, and retrospective biases. The main conclusion is that there is no uni-causal and time-invariant explanation for skill-biased changes in wages and employment in the Russian economy. The increased skill wage premium has been driven mainly by institutional factors during the early period and by productivity and technological change during the late transition period, and reinforced by market adjustment of wage ratio to the true differences in labour productivity.

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In this paper, we estimate returns to classroom and on-the-job firm-sponsored training in terms of value-added per worker using longitudinal linked employee-employer Canadian data from 1999 to 2006. We estimate a standard production function controlling for endogenous training decisions because of perceived net benefits and time-varying market conditions using dynamic panel GMM methods. We find that employees who undertook classroom training are 11 per cent more productive than otherwise similar employees. We show that returns to on-the-job training are on average lower (3.4 per cent). We provide evidence that these lower returns are due to on-the-job training being more closely related to turnover and more geared toward subjects that are less productivity-enhancing.

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We develop a dynamic discrete choice model of training choice, employment and wage growth, allowing for job mobility, in a world where wages depend on firm-worker matches, as well as experience, and tenure and jobs take time to locate. We estimate this model on a large administrative panel data set which traces labour market transitions, mobility across firms and wages from the end of statutory schooling. We use the model to evaluate the life-cycle return to apprenticeship training and find that on average the costs outweigh the benefits; however for those who choose to train the returns are positive. We then use our model to consider the long-term lifecycle effects of two reforms: One is the introduction of an Earned Income Tax Credit in Germany, and the other is a reform to Unemployment Insurance. In both reforms we find very significant impacts of the policy on training choices and on the value of realised matches, demonstrating the importance of considering such longer term implications.

A later version of this paper is indexed at TD/TNC 99.632.

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We use the method of Dominitz and Manski (1996) to solicit anticipated wage distributions for continuing to a Master degree or going to work after completing the Bachelor degree. The means of the distributions have an effect on intention to continue as predicted by theory. The dispersions in these individual distributions have no effect on intention to continue, suggesting that anticipated earnings risk does not play a role in the decision.

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Several German states recently introduced tuition fees for university education. We investigate whether these tuition fees influence the mobility of university applicants. Based on administrative data of applicants for medical schools in Germany, we estimate the effect of tuition fees on the probability of applying for a university in the home state. We find a small but significant reaction: the probability of applying for a university in the home state falls by two percentage points (baseline: 69 per cent) for high-school graduates who come from a state with tuition fees. Moreover, we find that students with lower high-school grades react more strongly to tuition fees. This might have important effects on the composition of students across states.

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