Estimating the Effect of Education on Wage: Using the Vietnam War Risk as an Instrumental Variable
Date Issued
2010
Date
2010
Author(s)
Chang, Teng-Jen
Abstract
This work intends to investigate the effect of the Vietnam War on the Vietnam Cohort’s economic performance in the 1980s through its exogenous impact on the cohort’s education choice behavior. The discussion will follow a difference-indifference approach, to see whether under higher Vietnam War risk, young males were more willing to attend college to avoid conscription, and also, how the exogenously increased education affected their future wage income. In this work, a year-state specific average casualty rate, thought of as a war risk index, is introduced as an instrumental variable to capture the explanatory power of the college education on the wage income. We find that both the war risk’s effect on the college education and the impacted college education’s on the wage income are positive and significant. These effects persisted not only in the Lottery Era, but throughout the Vietnam War Era.
Subjects
Education
Human capital
Instrumental variable
Vietnam War
Wage income
Type
thesis
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