Return to schooling in Germany
- This paper tries to apply common methods to estimate unbiased coefficients for the return to schooling in Germany for the year 2004. Based on the simple Mincer-type wage equation, the return to schooling is around 9.5% per year. There is no sheepskin effect. As expected the return in the private sector is higher than in the public sector. Females have a higher return than males, but there are no differences between East and West Germans. An Instrumental Variables and a 3-Stage-Least-Squares approach give very high returns. For correcting the sample selection, the Heckman Two Step Procedure and the Heckman Maximum Likelihood Approach are used. For both methods, the coefficients are very similar, but higher than without correcting for it.