Empirical Essays on the Economics of Education.

Zhang, Anwen (2015) Empirical Essays on the Economics of Education. PhD thesis, Lancaster University.

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Abstract

This thesis consists of three self-contained essays on the economics of education. Chapter 2 explores a secondary school admission policy reform and employs repeat sales data to examine the relationship between house prices and school quality. I use the reform to generate exogenous variation in school quality, and repeat sales data to eliminate time-invariant unobservable influences on house prices. There are two primary findings from this analysis. First, I find that a one standard deviation increase in school performance raises house prices by 2-2. 5% for non-flat properties. Conversely, flats do not respond to school quality. Second, I show that parents value school outputs more than they do school inputs. These findings are robust to a number of alternative school quality measures and samples. Chapter 3 provides evidence on the effectiveness of school capital investment on education outcomes by studying the short-run effect of a large school construction programme in England. Taking advantage of the phasing design that the whole programme is delivered in a sequence of waves, I apply difference-in-differences techniques to elicit the causal effect of school capital investment on student academic achievement. I find that the programme disproportionately affects pupils from different backgrounds: academically and socioeconomically disadvantaged students enjoy large and positive test score gains, while their more advantaged counterparts do not. The overall effect remains positive but much smaller and insignificant. There is some evidence suggesting heterogeneous effects by school types, project types, and time lengths of building occupancy. I further demonstrate that these results are not driven by student selection into newly built schools. Chapter 4 examines how income under-reporting could lead to biases in estimating returns to education for the self-employed. As the first step, I infer the true self-employment income following an expenditure-based approach. An average self-employed worker's reported earnings should be boosted by a factor of 1. 4 to arrive at the actual earnings. More importantly, the degree of income under-reporting is nonlinear across the income distribution. Lower-income self-employed households under-report more heavily. In the second step, I estimate the returns to education for self-employed workers using the inferred income data. I find income under-reporting leads to a severe upward bias in estimating the returns to education. Compared to employees, the self-employed extract lower returns from education.