In this chapter, we will:

• See that education represents a significant and rising investment in the OECD countries
• Study how the theory of human capital explains the choice of how much edu- cation to get
• Understand why time spent on acquiring education can also serve to signal individual abilities to future employers
• Grasp how the returns, individual and social, to education are estimated
• Work through an example of the estimation of the returns to education based on the contribution of Angrist and Krueger (1991), who use the method of instrumental variables (Data and programs allowing readers to replicate the main results of this contribution are available at www.labor-economics.org)
• Gain an overview of the principal results concerning the returns to education