This study is concerned with the causal effects of post-school education on individuals’ income and earnings. The study builds on and extends previous New Zealand research evidence on this topic reported in Maani (1996, 1997, 1999), Hyslop, Mare and Timmins (2003), Winkelmann and Winkelmann (1998) and Dixon (1998).
Estimates of the effect of post-school education on earnings are of policy interest for a number of reasons. Most importantly, education-related earnings differentials provide information on the incentives that exist for young people to undertake higher education. Changes in the size of educational earnings differentials over time can also provide information on the balance that exists between the demand for higher education and the supply of these skills in the labour market.