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Estimating the economic return to educational levels using data on twins

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Author Info
Gunnar Isacsson (Swedish National Road and Transport Research Institute, Borlänge, Sweden)
Abstract

This paper relaxes some restrictions of previous twin-based estimates of the effects of education on earnings. First, it estimates the earnings premiums associated with different educational levels. Second, it estimates a piecewise linear relationship between the natural logarithm of annual earnings and years of schooling. Third, the measurement error corrections are based on a less restrictive, 'non-classical', measurement error model. The estimation strategy implies that ability bias can be investigated separately in different parts of the educational distribution. The linear relationship between the logarithm of annual earnings and years of schooling is rejected. Furthermore, the results in the sample of identical (MZ) twins indicated both that the ability bias could be of different signs and of different magnitudes in different parts of the educational distribution. The twin-based estimates in the sample of fraternal (DZ) twins did not display any marked differences as compared to the cross-sectional estimates. Finally, the results indicated that the error-corrected twin-based estimates of the average return to years of schooling that rely on a classical measurement error model are upwards biased by approximately 30%. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.724
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File URL: http://qed.econ.queensu.ca:80/jae/2004-v19.1/
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 19 (2004)
Issue (Month): 1 ()
Pages: 99-119
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Handle: RePEc:jae:japmet:v:19:y:2004:i:1:p:99-119

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Alan Krueger & Orley Ashenfelter, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," NBER Working Papers 4143, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January. [Downloadable!] (restricted)
    Other versions:
  3. Isacsson, Gunnar, 1999. "Estimates of the return to schooling in Sweden from a large sample of twins," Labour Economics, Elsevier, vol. 6(4), pages 471-489, November. [Downloadable!] (restricted)
  4. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March. [Downloadable!] (restricted)
  5. Neumark, David, 1999. "Biases in twin estimates of the return to schooling," Economics of Education Review, Elsevier, vol. 18(2), pages 143-148, April. [Downloadable!] (restricted)
  6. Behrman, Jere R. & Rosenzweig, Mark R., 1999. ""Ability" biases in schooling returns and twins: a test and new estimates," Economics of Education Review, Elsevier, vol. 18(2), pages 159-167, April. [Downloadable!] (restricted)
  7. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier. [Downloadable!] (restricted)
  8. Thomas J. Kane & Cecilia Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," Working Papers 798, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  9. Rouse, Cecilia Elena, 1999. "Further estimates of the economic return to schooling from a new sample of twins," Economics of Education Review, Elsevier, vol. 18(2), pages 149-157, April. [Downloadable!] (restricted)
  10. Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1994. "Endowments and the Allocation of Schooling in the Family and in the Marriage Market: The Twins Experiment," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1131-74, December. [Downloadable!] (restricted)
  11. Miller, Paul & Mulvey, Charles & Martin, Nick, 1997. "Family Characteristics and the Returns to Schooling: Evidence on Gender Differences from a Sample of Australian Twins," Economica, London School of Economics and Political Science, vol. 64(253), pages 119-36, February. [Downloadable!] (restricted)
  12. 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. [Downloadable!] (restricted)
  13. Yitzhaki, Shlomo, 1996. "On Using Linear Regressions in Welfare Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(4), pages 478-86, October.
  14. Arellano, Manuel & Meghir, Costas, 1992. "Female Labour Supply and On-the-Job Search: An Empirical Model Estimated Using Complementary Data Sets," Review of Economic Studies, Blackwell Publishing, vol. 59(3), pages 537-59, July. [Downloadable!] (restricted)
  15. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier. [Downloadable!] (restricted)
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  16. Miller, Paul W & Mulvey, Charles & Martin, Nick, 1995. "What Do Twins Studies Reveal about the Economic Returns to Education? A Comparison of Australian and U.S. Findings," American Economic Review, American Economic Association, vol. 85(3), pages 586-99, June. [Downloadable!] (restricted)
  17. Orley Ashenfelter & David J. Zimmerman, 1993. "Estimates of the Returns to Schooling From Sibling Data: Fathers, Sons and Brothers," NBER Working Papers 4491, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  18. Griliches, Zvi, 1979. "Sibling Models and Data in Economics: Beginnings of a Survey," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S37-64, October. [Downloadable!] (restricted)
  19. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January. [Downloadable!] (restricted)
  20. John Bound & Gary Solon, 1998. "Double Trouble: On the Value of Twins-Based Estimation of the Return to Schooling," NBER Working Papers 6721, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Björklund, Anders, 2006. "Family Background and Outcomes Later in Life: A (Partial and Personal) Survey of Recent Research Using Swedish Register Data," Working Paper Series 4/2007, Swedish Institute for Social Research. [Downloadable!]
  2. Paul Bingley & Vibeke Myrup Jensen & Ian Walker, 2005. "The Effects of School Class Size on Length of Post-Compulsory Education: Some Cost-Benefit Analysis," IZA Discussion Papers 1605, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Nilsson, William, 2005. "Heterogeneity or True State Dependence in Poverty - The tale told by twins," UmeÃ¥ Economic Studies 650, Umeå University, Department of Economics. [Downloadable!]
  4. Nabanita Datta Gupta & Nina Smith & Leslie S. Stratton, 2005. "Is Marriage Poisonous? Are Relationships Taxing? An Analysis of the Male Marital Wage Differential in Denmark," IZA Discussion Papers 1591, Institute for the Study of Labor (IZA). [Downloadable!]
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