WP 15/24 Heterogeneity in Marginal Non-monetary Returns to Higher Education Daniel A. Kamhöfer; Hendrik Schmitz & Matthias Westphal October 2015 http://www.york.ac.uk/economics/postgrad/herc/hedg/wps/ Heterogeneity in Marginal Non-monetary Returns to Higher Education∗ Daniel A. Kamhofer¨ Hendrik Schmitz University of Duisburg-Essen University of Paderborn and CINCH, Essen and CINCH, Essen Matthias Westphal Ruhr Graduate School in Economics, University of Duisburg-Essen and CINCH, Essen October 2015 Abstract In this paper we estimate the effects of college education on cognitive abilities and health exploiting exogenous variation in college availability and student loan regu- lations. By means of semiparametric local instrumental variables techniques we es- timate marginal treatment effects in an environment of essential heterogeneity. The results suggest heterogeneous but always positive effects on cognitive skills and ho- mogeneously positive effects for all health outcomes but mental health, where the effects are around zero throughout. We find that likely mechanisms of positive phys- ical health returns are effects of college education on physically demanding activities on the job and health behavior such as smoking and drinking while mentally more demanding jobs might explain the skill returns. Keywords: Returns to higher education, cognitive abilities, health, marginal treatment effect JEL Classification: C31, H52, I12, I21 Daniel A. Kamhofer:¨ University Duisburg-Essen, Weststadtturme¨ Berliner Platz 6-8, 45127 Essen, Ger- many, Tel.: +49 201 183 6831, E-mail:
[email protected]. Hendrik Schmitz: University of Paderborn, Warburger Strasse 100, 33098 Paderborn, Germany, Tel.: +49 5251 603213, E-mail:
[email protected]. Matthias Westphal: University Duisburg-Essen, Weststadtturme¨ Berliner Platz 6-8, 45127 Essen, Ger- many, Tel.: +49 201 183 2196, E-mail:
[email protected].