Returns to University Education: Evidence from a Dutch Institutional Reform

In 1982 the duration of university education in the Netherlands was reduced from five to four years. This institutional reform is here used to estimate the causal effect of one year of university education on wages. I find that the fifth year of university education increased wages by 7%-9%. This differential is found by comparing wages of cohorts of graduates enrolling five years before and five years after the reform in a difference-in-differences approach. Copyright (c) The London School of Economics and Political Science 2006.