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Firm-Level Social Returns to Education

Author

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  • Martins, Pedro S.

    (Universidade Nova de Lisboa)

Abstract
Do workers benefit from the education of their co-workers? This question is examined first by introducing a model of on-the-job schooling, which argues that educated workers may transfer part of their general skills to uneducated workers and that this spillover is affected by the degrees of non-excludability, irreversibility and generality of those skills. We then conduct an empirical analysis drawing on a matched panel of Portuguese firms and their workers. Schooling endogeneity is tackled by considering firm fixed effects and instruments based on schooling lags and the lagged share of retirement-age workers. We find evidence of large firm-level social returns (ranging between 14% and 23% – and thus exceeding standard estimates of private returns) and of significant returns accruing to less educated workers but not to their more educated colleagues.

Suggested Citation

  • Martins, Pedro S., 2004. "Firm-Level Social Returns to Education," IZA Discussion Papers 1382, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1382
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    More about this item

    Keywords

    wages; endogenous growth; matched employer-employee data; education; spillovers;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I20 - Health, Education, and Welfare - - Education - - - General

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