Estimates of the economic return to schooling for 28 countries $ Philip Trostel a , Ian Walker b, * , Paul Woolley c a University of Maine, Orono, ME 04469, USA b Department of Economics, University of Warwick, Coventry CV4 7AL, UK c Keele University, Keele, Staffordshire ST5 5BG, UK Received 20 July 1999; received in revised form 4 July 2001; accepted 30 August 2001 Abstract The economic returns to schooling are estimated using comparable microdata in 28 countries, worldwide. Considerable variation in rates of return is found across countries. There is no evidence for a worldwide rising rate of return to education from 1985 through 1995. Indeed, the worldwide rate of return declines slightly over this period. In general, instrumental-variable estimates (using spouse’s and parents’ schooling as determinants of schooling) are over 20% higher than ordinary- least-squares estimates. D 2002 Elsevier Science B.V. All rights reserved. JEL classification: Returns to education; Instrumental variables 1. Introduction This paper estimates the rates of return to education in 28 countries using comparable microdata from 1985 through 1995. Our aim is to investigate how widespread are two important features of the recent, largely UK and US, literature: the rising rate of return to education, and the finding that least-squares estimates are biased downwards rather than, as had commonly been thought more plausible, upwards. 0927-5371/02/$ - see front matter D 2002 Elsevier Science B.V. All rights reserved. PII:S0927-5371(01)00052-5 $ We are grateful to the ESRC Data Archive at the University of Essex for supplying the data used in this analysis, to the Department for Education and Skills for funding the research and to an anonymous referee. The data used in the analysis and further results can be obtained from Professor Ian Walker. * Corresponding author. Tel.: +44-247-652-3054; fax: +44-247-652-3032. E-mail address: i.walker@warwick.ac.uk (I. Walker). www.elsevier.com/locate/econbase Labour Economics 9 (2002) 1 – 16