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Are Returns to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability-Earnings Relationships

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Author Info
Tobias, Justin

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Abstract

In this paper, I explore the ability-earnings relationships semiparametrically. I find evidence of nonlinearities in these relationships which vary across levels of schooling, and argue that ability-sorting into higher education creates problems for accurately identifying the return to schooling over the full ability support. Over an ability support which is ``common'' to those with and without a college education, we find that the college log wage premium is increasing for the more able, and this premium grew during the period 1984-1994 for individuals at all points in the ability distribution. Further, the growth of this wage premium appears to have followed a ``smoother'' path for high-ability individuals than individuals of lower ability.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12016.

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Date of creation: 27 Aug 2004
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Publication status: Published in Oxford Bulletin of Economics and Statistics, 2001, Vol. 61, No. 1, pp. 1-29.
Handle: RePEc:isu:genres:12016

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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  1. Astrid Krenz, 2008. "Theorie und Empirie über den Wirkungszusammenhang zwischen sozialer Herkunft, kulturellem und sozialem Kapital, Bildung und Einkommen in der Bundesrepublik Deutschland," SOEPpapers 128, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
  2. John DiNardo & Justin L. Tobias, 2001. "Nonparametric Density and Regression Estimation," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 11-28, Fall. [Downloadable!] (restricted)
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  3. Kevin Denny & Vincent O'Sullivan, 2004. "Can education compensate for low ability? Evidence from British data," IFS Working Papers W04/19, Institute for Fiscal Studies. [Downloadable!]
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  4. Gary Koop & Dale Poirier & Justin Tobias, 2003. "Bayesian Semiparametric Inference in Multiple Equation Models," Discussion Papers in Economics 04/17, Department of Economics, University of Leicester. [Downloadable!]
  5. Kevin Denny & Patrick Orla Doyle, 2005. "Returns to basic skills in Central and Eastern Europe - a semi-parametric approach," Working Papers 200507, School Of Economics, University College Dublin. [Downloadable!]
  6. Eric Bettinger, 2004. "How Financial Aid Affects Persistence," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 207-238 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  7. Newhouse, David & Suryadarma, Daniel, 2009. "The value of vocational education : high school type and labor market outcomes in Indonesia," Policy Research Working Paper Series 5035, The World Bank. [Downloadable!]
  8. Gary Koop & Justin Tobias, 2003. "Semiparametric Bayesian inference in smooth coefficient models," Discussion Papers in Economics 04/18, Department of Economics, University of Leicester. [Downloadable!]
    Other versions:
  9. Bernarda Zamora & Eduard Gracia, 2007. "Nature, Nurture And Market Conditions: Ability And Education In The Policy Evaluation Approach," Working Papers. Serie AD 2007-29, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  10. Dan A. Black & Jeffrey Smith, 2003. "How Robust is the Evidence on the Effects of College Quality? Evidence From Matching," University of Western Ontario, CIBC Human Capital and Productivity Project Working Papers 20033, University of Western Ontario, CIBC Human Capital and Productivity Project. [Downloadable!]
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  11. Darío Maldonado, 2008. "Education policies and optimal taxation," International Tax and Public Finance, Springer, vol. 15(2), pages 131-143, April. [Downloadable!] (restricted)
  12. Eliasson, Kent, 2006. "The Role of Ability in Estimating the Returns to College Choice: New Swedish Evidence," UmeÃ¥ Economic Studies 691, Umeå University, Department of Economics. [Downloadable!]
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