shine trader limited reports

What is the relationship between education and income

shine trader limited reports:

01

How much income can an extra year of reading bring?

Before this year’s Nobel Prize came out, Li Jingkui, Professor of Economics Department of Zhejiang University of Finance and economics, introduced the research of winners Joshua Angrist and Kruger in the revolution of causal inference in modern economics.

Li Jingkui said in his book:

Salary guidance price for academic qualifications published by Shenzhen in 2018:

◆ the average salary guidance price of postgraduates (including doctors and Masters) is 12389 yuan / month;

◆ the average wage guidance price of undergraduate education is 10122 yuan / month;

◆ the average salary guidance price of college degree is 8059 yuan / month;

◆ the average salary guidance price of high school education is 5620 yuan / month;

◆ the average salary guidance price of junior middle school and below is 4501 yuan / month.

From this guidance price, we can see that the salary guidance price of postgraduates is almost three times that of junior middle school students and below, and the salary guidance price of an undergraduate is twice that of junior middle school students.

Usually, parents will say: you see, reading is still good. A high degree is to earn more.

But economists will think more than ordinary parents. Is this causality or correlation?

Is it because of high education that leads to high wages?

Or is it because those who have obtained high education may be smarter themselves, not that education brings them higher income, but that their own intelligence brings them more income?

We should remember that causality and correlation are inevitable problems for many social science research. How to “clean” identify causality is the reason why the Nobel laureate won the prize.

Li Jingkui wrote in his book:

“They chose a magical instrumental variable – a person’s birth season or month, which can distinguish the impact of reading more than one year on future income from the effects of other factors, so as to clearly identify the causal effect.”

Let’s see how this research is carried out.

Because professors are all in the United States, they found that the American Compulsory Education Law has such provisions:

“As long as children reach the age of 6 in that year, they need to enter school in September of that year.

Only at the age of 16 can teenagers leave school and drop out of school and go home. ”

In other words, if a child’s birthday is December 31, he, like a child whose birthday is January 1, needs to enter school in September of that year.

On average, children born in the first quarter are about 6.45 years old when they enter school.

For children born in the fourth quarter, the average age at school is about 6.07 years old.

According to the conditions of dropping out of school, if a person’s birthday is January 1, he can drop out of school to work after January 1 in the year when he is 16 years old;

If his birthday is December 31, then he needs to go to school for a full year to legally leave school and class.

So the professors divided the children who dropped out of school at the age of 16 into two groups:

One group is the children whose birthday is earlier in the year, which is group A;

One group is the children whose birthday is later in the year, which is group B.

Since the children in group B have to go to school for a period of time more than those in group A, this forms a very good comparison condition for studying the income difference caused by reading more than one year, so as to make the causal relationship “clean” as far as possible.

Next, the two professors collected the income information of children born in the 1920s, 1930s, 1940s and 1950s in the United States in 1970 and 1980.

They found that for children born in the 1920s, those born in the first quarter went to school 0.126 years less than those born in the other three quarters, and the return on education was 0.7 percentage points lower.

For children born in the 1940s, those born in the first quarter went to school 0.109 years less than those born in the other three quarters, and the return on education was 1.02 percentage points lower.

In this way, the two professors tried to peel off the influence of other factors, revealing that without the influence of other variables, they came to the conclusion:

“Going to school for one more year itself has a positive impact on a person’s future income level. This impact is not caused by other factors, but purely the return brought by education.

The income of those who have received 12 years of education is 12% higher than that of those who have received 11 years of education, and the income of those who have received 16 years of education is 65% higher than that of those who have received 11 years of education. ”

02

Is going to a key university better than going to an ordinary university,

Higher returns?

One more year of study itself will have an impact on future income. Does it have a higher income impact to attend famous universities such as Peking University, Tsinghua University and ivy league than to attend ordinary universities?

In the United States, entering a four-year private university costs an average of about $30000 a year;

If you want to enter a world-class school such as Harvard University or MIT, the tuition fee is about $50000;

If you study at a public university in your state, the tuition fee paid is about less than $10000 a year.

The cost of attending famous schools is obviously higher. Will the return be higher?

This is another problem that professors study.

First of all, we should know that we can’t directly compare the income of graduates from Ivy League schools with that of graduates from public universities 20 years after graduation, which will also make the mistake of unclean causality.

The best way is to compare the same person in these two states, one is to go to an Ivy League school, the other is to go to a public university in his state, and then compare the average income level after 20 years in these two states.

However, it is unrealistic to think of it with your toes.

What did the two economists do?

They did this:

They selected those who had participated in the national college entrance examination in the United States, with a score of 1400 in mathematics and reading (SAT), and submitted applications to Harvard University and State University.

However, some of them did not go to Harvard for various reasons (for example, the State University provided more attractive scholarships, or the State University was closer to home, etc.) and went to cheaper state universities.

Some choose to go to the more expensive Harvard University.

These two groups are very good comparison objects.

Of course, the professors also stripped away some other variables. This research process is more complex, so I won’t introduce it.

Finally, the research results of the two professors show that:

Given the number of university applications and the selection level of the University applied for, and controlling some other control variables reflecting personal ability and family background, there is no significant difference in future income between students who choose rattan school or public university.

Therefore, if you once went to Peking University and Tsinghua University, but only went to an ordinary university for various reasons, you don’t have to regret that you missed a lot. Maybe you didn’t miss anything. What you missed is just your own unwillingness. Keep fighting and live.