Abstract

In the UK, Germany and other developed nations, education policy is predicated on the belief that measures that increase the stock of education in a country are beneficial to both individuals and society. Individuals can expect to increase their life-time earnings and to reduce their chances of unemployment as a result of acquiring greater knowledge and skills (“human capi-tal”) which render them more attractive to employers in the labour market (Becker, 1964).

Despite this theory, recent evidence from the UK and Germany has suggested that the causal effect of education on earnings is small, zero or even negative (Buscha and Dickson, 2014; Clark, 2014; Pischke and von Wachter, 2008). Furthermore, almost the entirety of the existing evidence on the causal impact of education in these domains makes the assumption that the impact is constant at each point in the working life of an individual. This assumption is unlikely to hold in reality, given the dynamic nature of the labor market.

The core aim of this project, therefore, is to address these deficiencies in the current literature on the causal returns to education for the UK and Germany. The detailed objectives of this re-search project are the following:

Aim 1: to provide robust, peer-reviewed evidence of the causal effect of education on earnings at different points in the work-life of individuals from different school types in Germany.
Aim 2: to compare the causal impact of education on earnings over the life-cycle in the UK and Germany for individuals from different parts of the education distribution.
Aim 3: to provide robust, peer-reviewed evidence of the causal effect of education on (un)employment in the UK and Germany for individuals from different parts of the education distribution and at different periods of their work-life.
Aim 4: to examine the causal impact of education on social mobility in Germany and the UK, in each case considering different parts of the education distribution to obtain a more complete picture than has previously been possible.