Journal of Population Economics

, Volume 23, Issue 2, pp 539–558

Firm-level social returns to education

Original Paper

Abstract

Do workers benefit from the education of their co-workers? We examine this question first by introducing a model of learning, which argues that educated workers may transfer part of their general skills to uneducated workers, and then by examining detailed matched employer–employee panel data from Portugal. We find evidence of large firm-level social returns (between 14% and 23%), much larger than standard estimates of private returns, and of significant returns accruing to less educated workers but not to their more educated colleagues.

Keywords

Education spillovers Matched employer–employee data Endogenous growth 

JEL Classification

J24 J31 I20 

References

  1. Acemoglu D, Angrist J (2000) How large are human capital externalities? Evidence from compulsory schooling laws. NBER Macroeconomics Annual 0:9–59CrossRefGoogle Scholar
  2. Arai M (2003) Wages, profits and capital intensity: evidence from matched worker-firm data. J Labor Econ 21(3):593–618CrossRefGoogle Scholar
  3. Ashenfelter O, Krueger A (1994) Estimates of the economic returns toschooling from a new sample of twins. Am Econ Rev 84(5):1157–73Google Scholar
  4. Barth E (2002) Spillover effects of education on co-worker productivity. Evidence from the wage structure. Paper presented at the European society of population economics annual conference, BilbaoGoogle Scholar
  5. Barth E, Dale-Olsen H (2003) Assortative matching in the labour market? Stylised facts about workers and plants. Paper presented at the comparative analysis of enterprise data conference, LondonGoogle Scholar
  6. Battu H, Belfield C, Sloane P (2003) Human capital spillovers within the workplace: evidence for Great Britain. Oxf Bull Econ Stat 65(5):575–594CrossRefGoogle Scholar
  7. Blanchflower D, Oswald A, Sanfey P (1996) Wages, profits and rent-sharing. Q J Econ 111(1):227–252CrossRefGoogle Scholar
  8. Bound J, Jaeger D, Baker R (1995) Problems with instrumental variables estimation when the correlation between the instrument and the endogenous explanatory variable is weak. J Am Stat Assoc 90(430):443–450CrossRefGoogle Scholar
  9. Ciccone A, Peri G (2006) Identifying human capital externalities: theory with an application to US cities. Rev Econ Stud 73(2):381–412CrossRefGoogle Scholar
  10. Currie J, Moretti E (2003) Mother’s education and the intergenerational transmission of human capital: evidence from college openings. Q J Econ 118(4):1495–1532CrossRefGoogle Scholar
  11. Gemmell N (1997) Externalities to higher education, report to the national committee of inquiry into higher education. St Clements House, NorwichGoogle Scholar
  12. Griliches Z, Hausman JA (1985) Errors in variables in panel data: a note with an example. J Econ 31(1):93–118Google Scholar
  13. Harmon C, Walker I (1995) Estimates of the economic return to schooling for the United Kingdom. Am Econ Rev 85(5):1278–1286Google Scholar
  14. Katz L, Autor D (1999) Changes in the wage structure and earnings inequality. In: Ashenfelter O (ed), Handbook of labor economics, vol 3A. North-Holland, Amsterdam, pp 1463–1555Google Scholar
  15. Krueger A, Lindahl M (2001) Education for growth: why and for whom? J Econ Lit 39(4):1101–1136Google Scholar
  16. Lochner L, Moretti E (2004) The effect of education on criminal activity: evidence from prison inmates, arrests and self-reports. Am Econ Rev 94(1):155–189CrossRefGoogle Scholar
  17. Lucas R (1988) On the mechanics of economic development. J Monet Econ 22(1):3–42CrossRefGoogle Scholar
  18. Martins P (2008) Rent sharing before and after the wage bill. Appl Econ (forthcoming)Google Scholar
  19. Martins P, Pereira PT (2004) Does education reduce wage inequality? Quantile regression evidence from 16 countries. Labour Econ 11(3):355–371CrossRefGoogle Scholar
  20. Martins P, Novo Á, Portugal P (2008) Increasing the legal retirement age: the impact upon wages, worker flows and firm performance. IZA Discussion PaperGoogle Scholar
  21. Mincer J (1974) Schooling, experience and earnings. National Bureau of Economic Research, New YorkGoogle Scholar
  22. Milligan K, Moretti E, Oreopoulos Ph (2004) Does education improve citizenship? Evidence from the U.S. and the U.K. J Public Econ 88(9–10):1667–1695CrossRefGoogle Scholar
  23. Modesto L (2003) Should I stay or should I go? Educational choices and earnings: an empirical study for Portugal. J Popul Econ 16(2):307–322CrossRefGoogle Scholar
  24. Moretti E (2004a) Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data. J Econ 121(1–2):175–212Google Scholar
  25. Moretti E (2004b) Workers’ education, spillovers and productivity: evidence from plant-level production functions. Am Econ Rev 94(3):565–690Google Scholar
  26. Pereira PT, Martins PT (2001) Portugal. In: Harmon C, Walker I, Westergaard-Nielsen N (eds) Education and earnings in Europe—a cross country analysis of returns to education. Edward Elgar, CheltenhamGoogle Scholar
  27. Rauch J (1993) Productivity gains from geographic concentration of human capital: evidence from the cities. J Urban Econ 34(3):380–400CrossRefGoogle Scholar
  28. Rudd J (2000) Empirical evidence on human capital spillovers. Federal Reserve Board WP.Google Scholar
  29. Silva JC (2003) Local human capital externalities or sorting? Evidence from a displaced workers sample. Universidade do Minho WPGoogle Scholar
  30. Vieira JC (1999) Returns to education in Portugal. Labour Econ 6(4):535–541CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.School of Business and ManagementQueen Mary, University of LondonLondonUK
  2. 2.IZABonnGermany
  3. 3.CEG-ISTLisbonPortugal
  4. 4.School of Economics and FinanceUniversity of St AndrewsSt AndrewsUK

Personalised recommendations