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This paper investigates the intergenerational effects of education in Japan using a nonparametric bounds approach. The educational levels of parents are considered key factors in explaining children's educational success. Nevertheless, the literature has not reached consensus on the causal effects of parents' education on their child's schooling. This is because both parents' and the child's schooling depend on unobserved heterogeneity. Moreover, the strong positive correlation of the mother's and father's schooling makes it difficult to separate the effects of each parent's schooling, making it unclear how to control spousal schooling in the analysis. Therefore, this paper estimates a set of semi-ordered vectors of both parents' schooling as an application of the nonparametric bounds method with multiple treatments. It thus derives bounds depending on relatively weak semi-monotonicity assumptions on treatment response, selection, and instrumental variables. A combination of these assumptions provides informative bounds on the average treatment effect of both parents' education on their child's schooling. The main results show that the tightest lower bounds suggest the positive causal effects of parents' schooling, but the tightest upper bounds on the effects are lower than the point estimates that rely on the assumptions of an exogenous selection for parents' schooling. These results suggest that simple regressions overestimate the true causal effect of parents' education.

This paper examines the returns to university education in Japan, using tuition, availability of universities, and labor market conditions as instrumental variables. To measure availability of universities, this paper uses total accredited capacity of all universities in the prefecture of residence at the age of 15. This measure captures cross-time and crossprefecture variations, because birth cohort and prefecture dummies are also controlled. A set of education policy-relevant instruments allows for estimation of the marginal effects for individuals who are induced to enroll in university by policy changes. Using the estimated marginal treatment effect, this paper recovers the average treatment effect parameters. The main empirical result shows that an additional year of university education increases hourly wage by about 9% on the population average. This paper also finds heterogeneous effects by subpopulation groups: the average effect of a year of university education for those enrolled in university is about 17%, but less than 2% for those who did not enroll. Finally, this paper investigates the average returns for those who are induced to enroll in university by a particular policy shift, such as free tuition or an increase in the capacity of local universities. The results suggest that such policy changes bring about positive effects of university education.