The impact of private high schools on adult earnings in Chile
In a recent issue of Labour Economics, Dr. Sergio Urzua and his colleagues investigate the long-term impact of attending a private high school on labor market outcomes in Chile. Utilizing data from the 2001 Measurement System of Education Quality (SIMCE), self-reported information on private and public educational expenditures from the SIMCE files, and the Unemployment Insurance (UI) administrative database, the study explores how attending private high schools influences adult earnings.
Dr. Urzua and his colleagues used an empirical strategy to exploit conditional independence assumptions and leverage the effects of self-selection based on ability. They find evidence suggesting that attending a private high school in Chile increases adult earnings significantly compared to attending public schools. Graduates of private high schools earn an average monthly premium of $99 to $144, representing a 15% to 22% higher income relative to their peers from public schools.
Apart from the findings, potential mechanisms behind the earning differentials are also examined. Academic factors, such as higher achievement test scores, and non-academic factors are mediators of the earning premium associated with private education. Dr. Urzua and his colleagues find that the financial resources available to private schools do not fully explain their superior outcomes, suggesting that other school specific factors, such as networks, play an important role. Dr. Urzua notes how the effects of the networks built in private schools could enhance the earnings made by the students, as they build better labor market prospects.
Dr. Urzua and colleagues highlight the role of firms in mediating the advantages of private school attendance during the transition from school to work. It demonstrates the impact of educational choices made early in life on later labor market outcomes, emphasizing the persistent inequalities created by access to high-quality education.