Earnings returns to the British education expansion

We study the effects of the large expansion in British educational attainment that took place for cohorts born between 1970 and 1975. Using the Quarterly Labour Force Survey, we find that the expansion caused men to increase education by about a year on average and gain about 8% higher wages; women obtained a slightly greater increase in education and a similar increase in wages. Clearly, there was a sizeable gain from being born late enough to take advantage of the greater educational opportunities offered by the expansion. Treating the expansion as an exogenous increase in educational attainment, we obtain instrumental variables estimates of returns to schooling of about 6% for both men and women.

► We study the UK education expansion that affected cohorts born from 1970 to 1975. ► We find that the expansion caused people to increase education by about a year. ► Post-expansion cohorts achieved about 8% higher wages as a result. ► This is a large gain from being born late enough to take advantage of the expansion. ► The instrumental variables estimates of returns to schooling are about 6%.