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Education and Its Distributional Impacts on Living Standards

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Author Info
Takahiro Ito

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Abstract

This paper investigates the determinants of living standards (measured by per capita consumption expenditure) at the household level, addressing heterogeneity in returns to education and endogeneity of educational status. The estimation results obtained through an instrumental variables quantile regression suggest that the endogeneity of education matters in determining the causal effect of education on living standards, while no evidence of the heterogeneity in the rate of returns to education is found. However, the results also provide evidence that impacts of other determinants vary significantly over the outcome (expenditure) distribution, and consequently a simulation based on the results shows that poverty alleviation impacts of education differs substantially between the instrumental variables quantile regression and standard instrumental variables regression results. The comparison of the two indicates the possibility that the impact on poverty reduction is likely to be overestimated in the standard instrumental variable regression.

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Publisher Info
Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-080.

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Date of creation: Aug 2009
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Handle: RePEc:hst:ghsdps:gd09-080

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Related research
Keywords: poverty; heterogeneous returns to education; instrumental variables quantile regression;

Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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  1. Takashi Kurosaki & Humayun Khan, 2006. "Human Capital, Productivity, and Stratification in Rural Pakistan," Review of Development Economics, Blackwell Publishing, vol. 10(1), pages 116-134, 02. [Downloadable!] (restricted)
  2. Ito, Takahiro, 2009. "Caste discrimination and transaction costs in the labor market: Evidence from rural North India," Journal of Development Economics, Elsevier, vol. 88(2), pages 292-300, March. [Downloadable!] (restricted)
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  3. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S7-36, October. [Downloadable!] (restricted)
    Other versions:
  4. Behrman, Jere R & Knowles, James C, 1999. "Household Income and Child Schooling in Vietnam," World Bank Economic Review, Oxford University Press, vol. 13(2), pages 211-56, May.
  5. Victor Chernozhukov & Christian Hansen, 2005. "An IV Model of Quantile Treatment Effects," Econometrica, Econometric Society, vol. 73(1), pages 245-261, 01. [Downloadable!] (restricted)
  6. Garen, John, 1984. "The Returns to Schooling: A Selectivity Bias Approach with a Continuous Choice Variable," Econometrica, Econometric Society, vol. 52(5), pages 1199-1218, September. [Downloadable!] (restricted)
  7. Kijima, Yoko, 2006. "Caste and Tribe Inequality: Evidence from India, 1983-1999," Economic Development and Cultural Change, University of Chicago Press, vol. 54(2), pages 369-404, January.
  8. Vani K. Borooah, 2005. "Caste, Inequality, and Poverty in India," Review of Development Economics, Blackwell Publishing, vol. 9(3), pages 399-414, 08. [Downloadable!] (restricted)
  9. Duraisamy, P., 2002. "Changes in returns to education in India, 1983-94: by gender, age-cohort and location," Economics of Education Review, Elsevier, vol. 21(6), pages 609-622, December. [Downloadable!] (restricted)
  10. 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)
  11. Chernozhukov, Victor & Hansen, Christian, 2006. "Instrumental quantile regression inference for structural and treatment effect models," Journal of Econometrics, Elsevier, vol. 132(2), pages 491-525, June. [Downloadable!] (restricted)
  12. Omar Arias & Walter Sosa-Escudero & Kevin F. Hallock, 2001. "Individual heterogeneity in the returns to schooling: instrumental variables quantile regression using twins data," Empirical Economics, Springer, vol. 26(1), pages 7-40. [Downloadable!] (restricted)
  13. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-91, May. [Downloadable!] (restricted)
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