Reanalyzing Zero Returns to Education in Germany
Pischke and von Wachter (Review of Economics and Statistics 2008; 90(3): 592–598) find zero earnings returns to compulsory schooling in the basic school track in Germany. We reanalyze their study using a different dataset. In an extension, we use additional instruments which allow estimation of heterogeneous effects for different groups of compliers. We can confirm the previous result and also find zero returns for other compliers in higher track schools. Moreover, we do not find a causal effect of schooling on cognitive skills. This is in line with a potential reason Pischke & von Wachter (2008) give for their result, namely that basic skills are learned earlier in Germany and additional years of schooling are no longer effective.
Kamhöfer, D. und H. Schmitz (2016), Reanalyzing Zero Returns to Education in Germany. Journal of Applied Econometrics, 31, 5, 865-872
DOI: 10.1002/jae.2461