Are OLS Estimates of the Return to Schooling Biased Downward? Another Look
AbstractThe authors examine evidence on bias in OLS estimates of the economic return to schooling. To study omitted-ability bias, they use test scores available in the National Longitudinal Survey of Youth as proxies for ability allowing for measurement error in these test scores. The authors also explore biases from the endogeneity of schooling or experience, or measurement error in these variables. In their data, OLS estimation including test scores appears to be appropriate and indicates an upward bias of roughly 40 percent in the OLS estimate ignoring ability. This contrasts with evidence from other recent research using different statistical experiments to purge schooling of its correlation with the wage equation error. Copyright 1995 by MIT Press.
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Bibliographic InfoArticle provided by MIT Press in its journal Review of Economics & Statistics.
Volume (Year): 77 (1995)
Issue (Month): 2 (May)
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Web page: http://mitpress.mit.edu/journals/
Other versions of this item:
- McKinley L. Blackburn & David Neumark, 1993. "Are OLS Estimates of the Return to Schooling Biased Downward? Another Look," NBER Working Papers 4259, National Bureau of Economic Research, Inc.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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- 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.
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