Is Academic-Track Schooling Worthwhile Without College? Decomposing Monetary Returns to Education
We estimate monetary wage returns to academic-track education, Germany’s elite secondary school type granting university entrance. Because academic-track attendance and subsequent university education are institutionally linked, we disentangle their contributions using a causal mediation analysis. Leveraging quasi-experimental variation from the educational expansion – independent openings of schools and universities – we identify (i) the direct effect of academic-track education holding university attendance constant and (ii) the indirect effect operating through university education. We find total monetary returns of 118%, with about 60 percentage points attributable to the indirect effect of additional university education with prior academic-track schooling, and the remaining 40 points to academic-track education alone.