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Title: Estimating Aggregate Human Capital Externalities

Citation Type: Miscellaneous

Publication Year: 2015

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Abstract: Using measures of Compulsory Schooling Laws as instruments for state average schooling, we find that one more year of average schooling leads to a 6-8% increase in individual wages. The effect is statistically significant and robust to different specifications. We also find the effect to be larger for less-educated workers. The key difference from previous strategies is that, the exogenous variation in average schooling induced by our instruments comes mainly from workers not used directly in the wage regression. We construct a model of human capital accumulation where the average human capital of an economy is allowed to affect the productivity of a typical firm in the economy. The calibration of the model suggests that the elasticity of a firms productivity with respect to the average human capital of the economy is about 0.12.

Url: http://www.ifs.org.uk/uploads/sticerd seminar papers/Ananth Seshadri 09.12.15.pdf

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Authors: Guo, Junjie; Roys, Nicolas; Seshadri, Ananth

Publisher: University of Wisconsin-Madison

Data Collections: IPUMS USA

Topics: Other

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