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Do Returns to Schooling Differ by Race and Ethnicity?

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Author Info

  • Lisa Barrow
  • Cecilia Elena Rouse

Abstract

Using data from the U.S. Decennial Census and the National Longitudinal Surveys, we find little evidence of differences in the return to schooling across racial and ethnic groups, even with attempts to control for ability and measurement error biases. While our point estimates are relatively similar across racial and ethnic groups, our conclusion is driven in part by relatively large standard errors. ; That said, we find no evidence that returns to schooling are lower for African Americans or Hispanics than for non-minorities. As a result, policies that increase education among the low-skilled have a good possibility of increasing economic well-being and reducing inequality. More generally, our analysis suggests further research is needed to better understand the nature of measurement error and ability bias across subgroups in order to fully understand potential heterogeneity in the return to schooling across the population.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 95 (2005)
Issue (Month): 2 (May)
Pages: 83-87

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Handle: RePEc:aea:aecrev:v:95:y:2005:i:2:p:83-87

Note: DOI: 10.1257/000282805774670130
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References

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  1. Lisa Barrow & Cecilia Elena Rouse, 2005. "Do Returns to Schooling Differ by Race and Ethnicity?," American Economic Review, American Economic Association, vol. 95(2), pages 83-87, May.
  2. Ashenfelter, Orley & Ham, John, 1979. "Education, Unemployment, and Earnings," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S99-116, October.
  3. Angrist, Joshua D & Krueger, Alan B, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 979-1014, November.
  4. William Rodgers & William Spriggs, 1996. "What does the AFQT really measure: Race, wages, schooling and the AFQT score," The Review of Black Political Economy, Springer, vol. 24(4), pages 13-46, June.
  5. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section..
  6. Chamberlain, Gary & Griliches, Zvi, 1975. "Unobservables with a Variance-Components Structure: Ability, Schooling, and the Economic Success of Brothers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 422-49, June.
  7. Carneiro, Pedro & Heckman, James J., 2003. "Human Capital Policy," IZA Discussion Papers 821, Institute for the Study of Labor (IZA).
  8. David Card, 2000. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," NBER Working Papers 7769, National Bureau of Economic Research, Inc.
  9. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-95, October.
  10. Thomas J. Kane & Cecilia Elena Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," NBER Working Papers 7235, National Bureau of Economic Research, Inc.
  11. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
  12. Altonji, Joseph G & Dunn, Thomas A, 1996. "The Effects of Family Characteristics on the Return to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 692-704, November.
  13. repec:fth:prinin:338 is not listed on IDEAS
  14. Orley Ashenfelter & Cecilia Rouse, 1996. "Income, Schooling, and Ability: Evidence from a New Sample of Twins," Working Papers 744, Princeton University, Department of Economics, Industrial Relations Section..
  15. Jin Huem Park, 1994. "Estimation of Sheepskin Effects and Returns to Schooling Using he Old and the New CPS Measures of Educational Attainment," Working Papers 717, Princeton University, Department of Economics, Industrial Relations Section..
  16. Taber, Christopher R, 2001. "The Rising College Premium in the Eighties: Return to College or Return to Unobserved Ability?," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 665-91, July.
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Citations

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Cited by:
  1. Anchor, John R. & Fiserová, Jana & Mars[iota]ková, Katerina & Urbánek, Václav, 2011. "Student expectations of the financial returns to higher education in the Czech Republic and England: Evidence from business schools," Economics of Education Review, Elsevier, vol. 30(4), pages 673-681, August.
  2. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 37-89.
  3. Leslie S Stratton & James N. Wetzel, 2008. "Increasing Returns to Education and Progress towards a College Degree," Working Papers 0805, VCU School of Business, Department of Economics.
  4. Lisa Barrow & Cecilia Elena Rouse, 2005. "Do Returns to Schooling Differ by Race and Ethnicity?," American Economic Review, American Economic Association, vol. 95(2), pages 83-87, May.
  5. Chiappori, Pierre-André & Oreffice, Sonia & Quintana-Domeque, Climent, 2011. "Black-White Marital Matching: Race, Anthropometrics, and Socioeconomics," IZA Discussion Papers 6196, Institute for the Study of Labor (IZA).

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