Does more schooling cause higher earnings?

What is it about?

People with more education tend to earn more. But is it education itself that causes higher earnings, or are other factors such as talent and motivation driving both? We can't run an experiment where some people are randomly assigned more schooling than others, so this has been hard to answer. We use the genetic lottery as a natural experiment. Which gene variants a child inherits from their parents is random. Some children get more variants related to schooling, others fewer. Since this creates random variation in schooling, it works like a natural experiment, letting us estimate whether more schooling actually leads to higher earnings. Combining genetic data with Norwegian registry data covering nearly full working careers, we find that an extra year of schooling increases earnings by about 8% in our main model. We used several methods and our results all point in the same direction: education pays off.

Featured Image

Photo by Kamil on Unsplash

Photo by Kamil on Unsplash

Why is it important?

The economic value of education matters for individuals, families, and policymakers. Our study contributes in two ways. First, it provides evidence that education pays off, using multiple methods and data covering nearly full working careers. Second, the study demonstrates how genetic data can help answer hard causal questions in the social sciences.

Perspectives