The external returns to education: UK evidence using repeated cross-sections

Augmenting a Mincerian earnings function with industry level data we estimate the external return to schooling for a repeated cross-section of individuals in the UK over the period 1994-2004. We find that a one year increase in the industry average level of schooling is associated with an increase in individual wages of 2.6 to 3.8 per cent, between 43 and 61 per cent of the private return to schooling. We illustrate the sensitivity of these estimates to the ICT and capital intensity of industry level production, the union density of the industry, and individuals' own level of schooling.