Skill, parental income, and IV estimation of the returns to schooling
AbstractRecently, attention has moved away from using parental background variables, such as parental education, in favour of using institutional features of the education system as instruments when estimating the return to schooling. In this paper, these possible instruments are revisited. Using the National Longitudinal Survey of Youth, several specifications of the wage equation are estimated and three types of instruments used - parental education, quarter of birth, and college proximity. It is shown that under some specifications - in particular, by including parental income and individual skill in the wage equation - parental education appears to be a valid and useful instrument. On the other hand, when using the institutional instruments, the weak correlation between the instruments and years of schooling produces imprecise and likely biased estimates of the return to schooling.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics Letters.
Volume (Year): 10 (2003)
Issue (Month): 5 (April)
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- Long, Mark C., 2008. "College quality and early adult outcomes," Economics of Education Review, Elsevier, vol. 27(5), pages 588-602, October.
- Tamar Khitarishvili, 2010. "Assessing the Returns to Education in Georgia," Economics Working Paper Archive wp_608, Levy Economics Institute, The.
- Sanjaya DeSilva & Mohammed Mehrab Bin Bakhtiar, 2011. "Women, Schooling, and Marriage in Rural Philippines," Economics Working Paper Archive wp_701, Levy Economics Institute, The.
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