Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States

Using earnings data from the 1980 Census, we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling, holding constant their current state of residence, their state of birth, the average return to education in the region where they currently reside, and other factors

David Card


Scholarcy highlights

  • This paper estimates the effects of school quality - - measured by the pupil-teacher ratio, the average term length, and the relative pay of teachers -. on the rate of return to education for men born between 1920 and 1949
  • The evidence we have assembled is necessarily non-experimental, we believe that our findings are consistent with causal interpretation of the role of school quality
  • Our analysis suggests that the relation between school quality and the returns to education is similar for whites and blacks
  • Since we believe that changes in the quality of black schooling were largely exogenous to individual student choices and backgrounds, the similarity of the estimated effects of school quality for the two race groups is reassuring
  • Our findings underscore the paradox we noted in the introduction: school quality appears to have an important effect on earnings, but is often found to have little measurable impact on standardized achievement tests
  • The correlations in the lower panel of Table 2 suggest that returns to education are significantly related to all thre. measures of school quality
  • At the performance of the education system as success a minimum, our finding of a positive link between school quality and the economic returns to education should give pause to those who argue that investments in the public school system have few benefits for students

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