Zero returns to compulsory schooling in Germany: evidence and interpretation

Abstract

We estimate the impact of compulsory schooling on earnings using changes in compulsory schooling laws in West Germany after World War II. Most estimates in the literature indicate returns in the range of 10% to 15%. While our research design is very similar to studies for various other countries, we find a zero return. We find no evidence that this is due to labor market institutions or the apprenticeship training system in Germany. The result might be due to the fact that the basic skills most relevant for the labor market are learned earlier in Germany than in other countries.