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Heterogeneity in schooling rates of return

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  • Henderson, Daniel J.
  • Polachek, Solomon W.
  • Wang, Le

Abstract

This paper relaxes the assumption of homogeneous rates of return to schooling by employing nonparametric kernel regression. This approach allows us to examine the differences in rates of return to education both across and within groups. Similar to previous studies we find that on average blacks have higher returns to education than whites, natives have higher returns than immigrants and younger workers have higher returns than older workers. Contrary to previous studies we find that the average gap of the rate of return between white and black workers is larger than previously thought and the gap is smaller between immigrants and natives. We also uncover significant heterogeneity, the extent of which differs both across and within groups. Finally, we uncover the characteristics common amongst those with the smallest and largest returns to education.

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Bibliographic Info

Article provided by Elsevier in its journal Economics of Education Review.

Volume (Year): 30 (2011)
Issue (Month): 6 ()
Pages: 1202-1214

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Handle: RePEc:eee:ecoedu:v:30:y:2011:i:6:p:1202-1214

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Web page: http://www.elsevier.com/locate/econedurev

Related research

Keywords: Mincer regressions; Nonparametric; Rate of return to education;

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References

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  1. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
  2. Harmon, Colm & Hogan, Vincent & Walker, Ian, 2001. "Dispersion in the Economic Return to Schooling," CEPR Discussion Papers 3037, C.E.P.R. Discussion Papers.
  3. Hsiao, Cheng & Li, Qi & Racine, Jeffrey S., 2007. "A consistent model specification test with mixed discrete and continuous data," Journal of Econometrics, Elsevier, vol. 140(2), pages 802-826, October.
  4. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2008. "Earnings Functions and Rates of Return," Journal of Human Capital, University of Chicago Press, vol. 2(1), pages 1-31.
  5. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2006. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," Handbook of the Economics of Education, Elsevier.
  6. Paul W. Miller & Barry R. Chiswick, 1999. "Language skills and earnings among legalized aliens," Journal of Population Economics, Springer, vol. 12(1), pages 63-89.
  7. Qi Li & Jeffrey Scott Racine, 2006. "Nonparametric Econometrics: Theory and Practice," Economics Books, Princeton University Press, edition 1, volume 1, number 8355.
  8. Beth J. Soldo & Olivia S. Mitchell & Rania Tfaily & John F. McCabe, 2006. "Cross-Cohort Differences in Health on the Verge of Retirement," NBER Working Papers 12762, National Bureau of Economic Research, Inc.
  9. Francisco L. Rivera-Batiz, 2007. "How Do Migrants from Latin America and the Caribbean Fare in the US Labour Market?," The World Economy, Wiley Blackwell, vol. 30(9), pages 1399-1429, 09.
  10. Racine, Jeff & Li, Qi, 2004. "Nonparametric estimation of regression functions with both categorical and continuous data," Journal of Econometrics, Elsevier, vol. 119(1), pages 99-130, March.
  11. Koop, Gary M & Tobias, Justin, 2004. "Learning About Heterogeneity in Returns to Schooling," Staff General Research Papers 12008, Iowa State University, Department of Economics.
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Cited by:
  1. Fossen, Frank M. & Büttner, Tobias J.M., 2013. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Economics of Education Review, Elsevier, vol. 37(C), pages 66-84.
  2. Chunbei Wang & Le Wang, 2012. "The effects of 9/11 on intermarriage between natives and immigrants to the U.S," Review of Economics of the Household, Springer, vol. 10(2), pages 171-192, June.
  3. Wang, Le, 2011. "How Does Education Affect the Earnings Distribution in Urban China?," IZA Discussion Papers 6173, Institute for the Study of Labor (IZA).
  4. Colm Harmon, 2011. "Economic Returns to Education: What We Know, What We Don’t Know, and Where We Are Going – Some Brief Pointers," Working Papers 201115, Geary Institute, University College Dublin.
  5. Li, Mingliang & Tobias, Justin L., 2011. "Bayesian inference in a correlated random coefficients model: Modeling causal effect heterogeneity with an application to heterogeneous returns to schooling," Journal of Econometrics, Elsevier, vol. 162(2), pages 345-361, June.
  6. Areendam Chanda & Bibhudutta Panda, . "Unbalanced Productivity Growth in US States: Evidence from Factor Prices," Departmental Working Papers 2012-04, Department of Economics, Louisiana State University.
  7. Simone Balestra & Uschi Backes-Gellner, 2013. "Heterogeneous Returns to Education Over Wage Distribution: Who Pro ts the Most?," Economics of Education Working Paper Series 0091, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Dec 2013.
  8. Areendam Chanda & Bibhudutta Panda, . "Productivity Growth in Goods and Services across US States: What can We Learn from Factor Prices?," Departmental Working Papers 2011-16, Department of Economics, Louisiana State University.
  9. Zhu, Rong, 2011. "Individual heterogeneity in returns to education in urban China during 1995-2002," Economics Letters, Elsevier, vol. 113(1), pages 84-87, October.

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