Structural Estimates of the Intergenerational Education Correlation
AbstractUsing a structural dynamic programming model, we investigate the relative importance of family background variables and individual specific abilities in explaining cross-sectional differences in schooling attainments and wages. Given scholastic ability, household background variables (especially parents' education) account for 68% of the explained cross- sectional variations in schooling attainments. When the effects of household background variables on ability are also taken into account, the percentage raises to 85%. However, individual differences in wages are mostly explained by abilities. Only 27% of the explained variation in wages is accounted for by parentsâ€™ background variables as opposed to 73% by unobserved abilities (orthogonal to family background variables). When scholastic ability is correlated with family background variables, ability endowments explain as much as 81% of individual wages. [Working Paper No. 973]
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Date of creation: Sep 2010
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intergenerational education correlation; endogenous schooling; household characteristics; dynamic programming;
Other versions of this item:
- Belzil, Christian & Hansen, Jörgen, 2003. "Structural Estimates of the Intergenerational Education Correlation," IZA Discussion Papers 973, Institute for the Study of Labor (IZA).
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-09 (All new papers)
- NEP-EDU-2010-10-09 (Education)
- NEP-LAB-2010-10-09 (Labour Economics)
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- Michael P. Keane & Kenneth I. Wolpin, 1995.
"The career decisions of young men,"
Working Papers, Federal Reserve Bank of Minneapolis
559, Federal Reserve Bank of Minneapolis.
- Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(3), pages 473-522, June.
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