The Returns to Education in Arkansas: Evidence from the 1987 Compulsory Education Law

This paper estimates the returns to education in Arkansas-one of the last states to extend compulsory schooling-using ACS 2023 data and the 1987 Compulsory Schooling Law (CSL) reform as an instrument. OLS estimates imply returns of 9.5-10.4 percent per year of schooling. The CSL reform increased schooling among compliers by 0.67-0.73 years and yields IV returns of 10.4-11.7 percent, exceeding OLS estimates. The results indicate that those compelled to remain in school benefited most, consistent with global evidence on higher causal returns for disadvantaged students.