Is a College Degree Worth Pursuing?: Evidence from BHPS Dataset

Abstract

The returns to education have become a hot topic since the 1990s. In this paper, we first present the OLS estimates and it shows that an additional year of schooling can increase monthly wages by 8-9%. However, because of the bias that is caused by the endogeneity of years of schooling, 2SLS estimates are also presented. The results from 2SLS show a 7.3% return to an additional year of education, which coincides with Angrist and Krueger's estimates. [1] Using the results from our data, we also estimate whether it is worthwhile pursuing a college degree with the increase in college tuition fee since 2012 in the UK, and find that on average the returns to a college degree is slightly lower than the opportunity costs.