This paper estimates the effects of school quality--measured by the pupil/teacher
ratio, average term length, and relative teacher pay--on the rate of return to education
for men born between 1920 and 1949. Using earnings data from the 1980 census, we
find that men who were educated in states with higher-quality schools have a higher
return to additional years of schooling. Rates of return are also higher for individuals
from states with better-educated teachers and with a higher fraction of female teachers.
Holding constant school quality measures, however, we find no evidence that parental
income or education affects average state-level rates of return.