Returns to Education:
New Evidence from a Discontinuity
in School Entry Tests

JOINT WITH Dominik Hangartner and Stefan Boes

Many theories developed in the social sciences argue that education is of major causal importance for a variety of outcomes. The empirical quantification of education effects, however, is a challenging task. First, education is a choice variable driven by numerous factors, only some of which are observed, and which often have a direct effect on the outcome, too. Second, education is commonly measured by the years of schooling which largely disregards the complexity of a diverse education system. Third, the effects of education are likely heterogeneous over different educational levels and across individuals. As a consequence, if potential confounders and heterogeneity are neglected in a regression-type model, then standard estimators will generally be biased for the true causal effect.

This project aims at the estimation of causal education effects using a unique feature of the Swiss education system. Pupils around the age of 12 had to pass a centrally organized exam (the «Sekundar- or Gymnasialprüfung»). The result of this exam determined the level of secondary school that pupils could attend, and their educational track. Thus, the exam had a large impact on the highest education achieved. For estimation purposes, we can take advantage of a discontinuity in the classification scheme. Pupils below a certain threshold were classified in lower level secondary school, pupils above the threshold in higher level secondary school. Strategic sorting near the threshold can be plausibly ruled out because grading was delegated to external experts. This allows us to analyze the education outcomes of pupils near the discontinuity as if they would come from a randomized experiment.

The project is structured in two parts. The first part is concerned with a large survey of former pupils. In 9-months preparatory work we have identified several schools that conducted the test and archived the old exam results. We have collected this data in extensive field work and have updated the contact details of about 3000 former pupils. Now we plan to conduct a large scale survey about demographic aspects (e.g., civil status, fertility, and health related behavior), economic aspects (e.g., employment prospects, earnings, risk preferences, time discounting), political interest (e.g., turnout, party identification, political attitudes), and sociological and psychological aspects (e.g., altruism, discrimination, social capital). This will provide us a unique database.

The second part tackles the empirical quantification. Using fuzzy regression discontinuity methods, we estimate causal education effects by comparing pupils just below and above the threshold and how they differ in the outcome of interest. These pupils are assumed to be similar, and thus comparable. Given the nature of our data, we expect to obtain causal education effects for a large range of topics. Moreover, due to the lack of credible exogenous variation in almost all previous studies we expect to be among the first that provide such evidence. The results of a pre-study are promising and confirm our expectations. From a policy perspective, our results are, among other things, of great relevance in the on-going debate about harmonizing education systems.

The Effects of Electoral Institutions and Information on Electoral Competition and Selection

Joint with Mark Schelker, Simon Lüchinger, AND CHRISTINE BENESCH

Regular and free elections are the key component of democracy. Elections allow voters to select the most competent candidates, while reelection prospects incentivize politicians to provide effort. Despite the importance of elections for the workings of democracy, we still have limited knowledge on the impact of elections on political, economic and social outcomes. A key question in the political economy literature is how institutions and information shape politics. Electoral institutions, such as female suffrage or postal voting, and the information structure of voters affect which politicians get elected (selection effect) but also how politicians behave once they are in office (incentive effect). Disentangling these effects is important because it enhances our understanding of the channels through which political institutions and voter information affect political outcomes. 

The proposed research uses a novel empirical strategy to separate selection and incentive effects. We develop a new methodological approach for causal inference in proportional electoral systems and collect detailed information on cantonal legislative elections in Switzerland in the period of 1950–2015. Our newly collected electoral data within the “Swiss empirical laboratory” offers a unique setting to study the effects of institutions and information on selection and incentives. The Swiss case is particularly well suited for empirical research because its 26 subnational electoral systems offer variation across time and space. From a methodological perspective, we disentangle the selection from the incentive effect by using a regression discontinuity framework that allows us to estimate the incumbency advantage, a well-established measure of political competition. If political competition is high, elected officials with reelection concerns have strong incentives to cater to citizens’ preferences and to provide effort. In addition to this incentive effect, we study how institutional changes and new information technologies affect the selection of politicians in terms of education, profession, age, and gender. 

To study the effects of institutions on selection and incentives, we focus on two institutional changes, namely the staggered introduction of female suffrage and postal voting in Swiss cantons. The enfranchisement of women was the major change in electoral laws in the 20th century and postal voting considerably lowered the costs of voting. To study the effect of information on selection and incentives, we explore the consequences of the introduction of the voting aid application Smartvote. The introduction of Smartvote decreased information costs for voters because it allows a simple comparison between voters’ and candidates’ preferences. Relying on our proposed research design, we further examine the outcomes of political competition and analyze whether elected politicians appropriate private rents. We explore whether barely elected candidates have a higher likelihood to hold board of director positions when compared to arguably similar but not elected candidates. A pilot study using federal-level data has revealed that our research design is feasible and the key identification assumptions of our proposed method are fulfilled. Moreover, we have already collected and digitized a large portion of the required data at the cantonal and federal level (information on 186,215 candidates in cantonal and on 25,800 candidates in federal elections). Given the advantages of our proposed research design and the amount of new data collected, we are confident that this study will make an important contribution to our understanding of how and through which channels institutions and information affect political outcomes. In addition to our research contribution, the project promises to provide valuable insights for a broader public interested in Swiss public policy. We will make the three novel datasets available to other researchers upon completion of the project. 

Compulsory Voting and Redistribution

Joint with Michael Bechtel, Reto Föllmi, and Dominik Hangartner 

The (re-)introduction of compulsory voting laws and their abolishment has been a frequently debated political issue in Switzerland and many other democratic countries. The debates over compulsory voting laws expose, at least to some degree, often a societal fault line. On the one hand, some advocacy groups and policymakers support a general introduction of compulsory voting laws. Compulsory voting is seen as a remedy against low voter turnout, especially among the low-skilled and low-educated, and as a device to encourage political participation and collective action in general. On the other hand, opponents of compulsory voting laws interpret the right to vote to also include the right not to vote and argue that compulsory voting is a paternalistic violation of individual liberty. Given the decreasing levels in turnout, the debates about compulsory voting laws are likely to continue to grow in the years ahead.

In addition to the normative debate surrounding compulsory voting, there is also a positive literature discussing its political consequences. One of the key debates over compulsory voting involves its effects on overall turnout and how these additional voters have different policy preferences than the prior constituency which subsequently leads to more redistribution, higher spending for welfare and education, and higher public debts and tax rates. To date, empirical research on the causal effects of compulsory voting has made limited progress, in large part due to methodological impediments. Existing studies have mostly relied on crude, cross-national comparisons. By exploiting a natural experiment, namely the introduction and subsequent abolishment of compulsory voting laws in the canton of Vaud between 1924 and 1948, we identify the causal effects of compulsory voting on turnout and preferences for redistribution.

The project will make an important contribution to the understanding of the effects of political participation and compulsory voting on turnout and redistribution. Our newly collected dataset will for the first time allow us to document and analyze the effects of compulsory voting using a credible, sub-national design. The nuanced cross-cantonal comparisons will contribute to the core debates in the literature about the effects of compulsory voting on turnout, political collective action, redistribution, welfare spending, taxes, and public debts.

Finally, our project is also important from a policy perspective. Past and present compulsory voting laws are highly relevant policy issues and will continue to gain importance in the light of decreasing levels of political participation. But despite these frequent and at times heated debates, there exists almost no systematic empirical evidence that could inform these normative policy discussions. Systematic data is absent even for basic facts, such as the direct effects of compulsory voting on turnout as well as its indirect effects on levels of redistribution, tax rates and public debts.