Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
966155 | Journal of Macroeconomics | 2008 | 15 Pages |
Abstract
We propose that per-capita income gaps across US states and Canadian provinces can be explained by university education. Our ordinary least-squares regressions show university education having a robust positive and significant effect on per-capita incomes, when controlling for, e.g. taxes, unionization, government spending, and the sectoral composition of the economy. To control for endogeneity we instrument education today with different historical variables: population density in 1900, railway density in 1900, the sex ratio (men per woman) in 1900, and the fraction slaves in 1850. Our results support a causal link from education to incomes, and the hypothesis that these historical variables are valid instruments. We also find that the Canada dummy is mostly insignificant, and always positive.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Syed A. Basher, Nils-Petter Lagerlöf,