Misreported schooling, multiple measures and returns to educational qualifications

Abstract

We consider the identification and estimation of the average wage return to attaining educational qualifications when attainment is potentially measured with error. By exploiting two independent measures of qualifications, we identify the extent of misclassification in administrative and self-reported data on educational attainment. The availability of multiple self-reported educational measures additionally allows us to identify the temporal patterns of individual misreporting errors across survey waves. We provide the first reliable estimate of a highly policy relevant parameter for the UK, namely the return from attaining any academic qualification compared to leaving school at the minimum age without any formal qualification. We identify returns to qualifications under two alternative settings: a strong ignorability assumption and an exclusion restriction. All these results are obtained by casting the identification problem in terms of a mixture model, and using a semi-parametric estimation approach based on balancing scores, which allows for arbitrarily heterogeneous individual returns.