Returns to schooling and potential signalling effects: Estimates based on ISSP data on Sweden

Abstract: This thesis estimates the returns to schooling in Sweden for working individuals by applying the Mincer equation on three datasets from the International Social Survey Programme and compare the results to assess potential trends. It also investigates if there is any difference in returns to schooling for men and women and if there seem to be any signalling effects present. The estimates indicate that the returns to schooling are around 4 percent in Sweden during the period of 1997 to 2015. Furthermore, our results suggest that the returns to schooling remains relatively constant during the entire period. The estimates do appear to differ between males and females, with the male estimates being higher for all years. The results also indicate that we might observe some signalling effects as the coefficients to the dummy variables for obtaining a University degree are statistically significant. However, this might be due to other factors. The resulting estimates are likely somewhat biased upward due to the innate ability of the individual not being accounted for and thus producing an ability bias.