Schooling and Labor Market Impact of the 1968 Nine-Year Education Program in Taiwan

The extension of basic schooling from six to nine years in 1968 was the largest expansion of education in Taiwan’s modern history. More than 140 new junior high schools were opened in 1968 under this program, increasing the number of junior high schools by 70 percent from 1967 to 1968. We evaluate the effect of this program on education and wages by analyzing cohort differences in educational attainment induced by the timing of the program and by combining these cohort differences with differences across counties in the number of schools built. These estimates suggest that children who were between the ages of 6 and 11 in 1968 received 0.6 additional years of education for every school constructed per 1000 children between the ages of 12 to 14. We use the exogenous variation in schooling due to this program to construct instrumental variable (IV) estimates of the returns to education. We find that IV estimates based on cohort differences in education are lower than the corresponding OLS estimates, but IV estimates based on regional differences in inter-cohort patterns are not significantly different from the OLS estimates. * We thank Anne Case, Angus Deaton, Jeff Kling, Jonathan Parker, Christina Paxson, and Jeff Perloff for helpful comments. Christina Paxson generously provided the data from the Survey of Personal Income Distribution and Taiwan's DGBAS provided the data from the Manpower Utilization Survey and the 1990 Population Census. Diana E. Clark thanks the National Science Foundation's graduate fellowship program for financial support.