Conventional empirical studies on the returns to schooling assume that the return for an additional year of schooling is the same across individuals. In this project we relaxed this assumption by developing and applying new microeconometric methods that account for heterogeneous returns to schooling and identify the causal effects of schooling. Policy measures that change the individual´s cost of schooling lead to a change in the composition of individuals who invest in schooling. Hence we developed microeconometric tools to identify the causal effects of these policy measures. According to our studies the average returns to education is 6 percent in Germany, with a slightly increasing tendency in recent years. The project was part of the DFG research group on Heterogeneous Labour: Positive and Normative Aspects of the Skill Structure of Labor a cooperation of the University of Konstanz and the ZEW Mannheim. Three students finished their PhD thesis in the project (Anton Flossmann, Markus Jochmann, Michael Maier).

Selected Publications

Articles in Refereed Journals

Eisenhauer, Philipp and Friedhelm Pfeiffer (2008), Assessing Intergenerational Earnings Persistence Among German Workers, Journal of Labour Market Research 2&3, 119-137.

Gernandt, Johannes and Friedhelm Pfeiffer (2007), Rising Wage Inequality in Germany, Journal of Economics and Statistics 227 (4), 358-380.

Göggel, Kathrin, Johannes Gräb and Friedhelm Pfeiffer (2007), Selbständigkeit in Europa 1991 - 2003: Empirische Evidenz mit Länderdaten, Journal of Economics and Statistics 227/2, 153-167.

Pfeiffer, Friedhelm and Henrik Winterhager (2006), Vermittlungsgutscheine und Beauftragungen Dritter im Vergleich, Journal for Labour Market Research 39 (3&4), 425-445.

Flossmann, Anton and Winfried Pohlmeier (2006), Causal Returns to education: A Survey on Empirical Evidence for Germany, Jahrbücher für Nationalökonomie und Statistik 226 (1), 6-23.

Monographs, Contributions to Edited Volumes

Pfeiffer, Friedhelm and Karsten Reuß (2008), Fähigkeiten und Mobilität – Ökonomische Konsequenzen für das Humankapital in Ostdeutschland, in: K. Friedrich und A. Schultz forum ifl, LLL:citation.label.volume 8 43-50.

Jochmann, M. and W. Pohlmeier (2004), Der kausale Effekt von Bildungsinvestitionen, in: W. Franz, H. J. Ramser, M. Stadler (Hrsg.) Schriftenreihe des wirtschaftswissenschaftlichen Seminars Ottobeuren,, Mohr Siebeck, Tübingen,.

Jochmann, M. and W. Pohlmeier (2003), The Causal Effect of Overqualification on Earnings: Evidence from a Bayesian Approach, in: F. Büchel, A. de Grip, A. Mertens (Hrsg.) Edward Elgar, Cheltenham, 93-108.

Maier, M., Friedhelm Pfeiffer and W. Pohlmeier (2003), Overeducation and Individual Heterogeneity, in: F. Büchel, A. de Grip, A. Mertens (Hrsg.) Edward Elgar, Cheltenham, 133-152.

Discussion and Working Papers

Gernandt, Johannes and Friedhelm Pfeiffer (2008), Wage Convergence and Inequality after Unification: (East) Germany in Transition, ZEW Discussion Paper No. 08-022, Mannheim. Download

Aldashev, Alisher, Johannes Gernandt and Stephan L. Thomsen (2007), Language Usage, Participation, Employment and Earnings, FEMM Working Paper No. 18, Magdeburg. Download

Gebel, Michael and Friedhelm Pfeiffer (2007), Educational Expansion and its Heterogeneous Returns for Wage Workers, ZEW Discussion Paper No. 07-010, Mannheim. Download

Gernandt, Johannes, Michael Maier, Friedhelm Pfeiffer and Julie Rat-Wirtzler (2006), Distributional Effects of the High School Degree in Germany, ZEW Discussion Paper No. 06-088, Mannheim. Download

Gernandt, Johannes and Friedhelm Pfeiffer (2006), Rising Wage Inequality in Germany, ZEW Discussion Paper No. 06-019, Mannheim. Download

Maier, M. and A. Kuckulenz (2005), Heterogeneous Returns to Training. An Analysis with German Data Using Local Instrumental Variables, unveröffentlichtes Diskussionspapier,, ZEW.

Jochmann, M. (2003), Semiparametric Bayesian Inference for Count Data Treatment Models, unveröffentlichtes Diskussionspapier, Universität Konstanz.

Project duration

01.05.2002 - 30.06.2008

Project members

Winfried Pohlmeier (Coordinator)
PD Dr. Friedhelm Pfeiffer (Coordinator)
Dr. Alisher Aldashev
Anton Flossmann
Dr. Johannes Gernandt
Michael Maier

Cooperation partner

Prof. Jörn-Steffen Pischke, Ph.D., London School of Economics
Prof. Dr. Michael Lechner, Universität St. Gallen, CH
Prof. Dr. Luc Bauwens, Université Catholique Louvain