Ebook Measuring the Effect of a School Reform on Educational Attainment and Earnings
Most industrial countries have experienced an increasing demand for high skilled workers due to a relative employment shift in favor of skilled workers during the last decades (OEDC 1998). Educational reforms have been at the center of the debate to alleviate this apparent scarcity of skills.
The purpose of these reforms is to enhance educational attainment, and thereby increase the skill of the population. Informed public policy decisions about educational reforms and investment in human capital require rigorous analysis of the returns to education both in general and especially the returns to different groups targeted for increased educational attainment.
The main problem in measuring returns to education is the fact that the decision to take more education is a complex process. Factors like individual ability, financial constraint and preferences are usually unobserved for the researcher. This creates an endogeneity problem inherent in most evaluation and labor market studies (Heckman 1974, 1976, Gronau 1974). An additional problem relates to the heterogeneity in the return parameters of education and the interpretation of different return parameters.
The return to education has both a common and a random part varying with different characteristics of subgroups of the population (Willis and Rosen 1979, Lang 1991, Card 1995, 1999, Heckman and Vytlacil 1999). This heterogeneity arises if individuals select into education based on their comparative advantages of education (Roy 1951, Becker 1979). A natural but mainly unexploited resource of information to overcome these problems are the educational reforms in the European countries in the postwar period.
The focus in the present paper is to exploit some interesting features of one of the school reforms in Norway - the school reform extending the mandatory years of schooling from 7 to 9 years. The reform took 10 years to implement and we observe same birth cohorts going through both compulsory school systems. We will assess both the effect of the reform on higher participation rates into higher education in general, and whether the impact of socio economic and geographical factors were reduced after the reform since disadvantaged groups were especially targeted in the reform. Further, we test whether higher education levels caused by the reform lead to higher returns to education, again both in general for the population and for the groups especially targeted.
For these purposes both the Norwegian reform and the very detailed data set available are ideal for analyzing the effects of a school reform which distinguishes it from most of the literature on the returns to education. First, the reform shares some common features of school reforms that took place at about the same time and still with very limited economic research. These reforms are characterized by extending the number of compulsory years of schooling and unifying the education system at higher and higher education levels.
The aim of the reform was stated explicitly in several governmental background papers, and were 1) to increase the minimum level of education in society by extending the number of compulsory education from 7 to 9 years, 2) to smooth the transition to higher education in general by unifying the education system up to secondary education, and 3) to enhance equality of opportunities both along the socio-economic dimension and in particular the geographical dimension both by providing resources to establish the new comprehensive schools in all municipalities and by securing a common curriculum for all schools. Important to note is that the potential impacts are expected to be stronger and thus easier to measure in the case of Norway than in most other countries, since it has been pointed out that the Norwegian reform along with the Swedish reform went further both in the unification of the comprehensive school system as well as in promoting equality of opportunities (Leschinsky and Mayer 1990). The rich data set available both on the reform and family background variables such as parents income will be helpful in analyzing the effect of the reform on educational attainment and the effect of education on earning.
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