ABSTRACT
Using micro-data from the Manpower Utilization Survey 1995–2015 of Taiwan, this paper exploits exogenous variation in years of schooling caused by the 9-year compulsory education reform to estimate the economic returns to schooling. The results of fuzzy regression discontinuity design indicate that the causal effect of education on wage is approximately 5.6%, smaller than the corresponding ordinary least squares estimates. Our results are robust to various specifications and placebo tests.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 2.30% for senior high school, 3.98% for vocational school, 4.58% for junior college, and 12.20% for university.
2 Card (Citation2001) offers a survey of IV literature on returns to education, the IV estimates of returns to education are typically larger than the corresponding OLS estimates.
3 No observations are dropped through procedures (2) and (3).