Advanced Search
MyIDEAS: Login to save this paper or follow this series

Estimating Returns to Education when the IV Sample is Selective

Contents:

Author Info

  • Wang, Le

    ()
    (University of Alabama)

Registered author(s):

Abstract

The literature estimating returns to education has often utilized spousal education and parental education as instrument variables (IV). However, due to usual survey designs, both IVs are available only for the individuals whose spouse or parents are present in the same household. The IV estimates based on these selective sub-samples may be inconsistent, even when the IVs satisfy the standard assumptions. In this paper, we examine the empirical relevance of this issue in the Chinese context. To our surprise, unlike the selection issue in other situations, this kind of selection does not appear particularly worrisome, suggesting that the previous IV results are robust. In particular, using China Household Income Project 1995 and 2002, we find that correcting for this potential issue has only a modest impact on the magnitude of the standard IV estimates using parental education as an IV, but a negligible impact on those using spousal education. Using the specification tests proposed, we find that these impacts are generally not statistically significant. These results are further confirmed by our analysis using U.S. data. We believe that these results are of use to both policymakers and practitioners.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp7103.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7103.

as in new window
Length: 40 pages
Date of creation: Dec 2012
Date of revision:
Publication status: published in: Labour Economics, 2013, 21, 74-85
Handle: RePEc:iza:izadps:dp7103

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: Chinese labor market; returns to education; sample selection; instrument variable estimation;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Joshua Angrist & Victor Lavy & Analia Schlosser, 2010. "Multiple Experiments for the Causal Link between the Quantity and Quality of Children," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 28(4), pages 773-824, October.
  2. Thomas Lemieux & David Card, 1998. "Education, Earnings, and the "Canadian G.I. Bill"," NBER Working Papers 6718, National Bureau of Economic Research, Inc.
  3. Mogstad, Magne & Wiswall, Matthew, 2010. "Instrumental Variables Estimation with Partially Missing Instruments," IZA Discussion Papers 4689, Institute for the Study of Labor (IZA).
  4. Jeffrey M. Wooldridge, 2001. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262232197, December.
  5. Psacharopoulos, George & Patrinos, Harry Anthony, 2002. "Returns to investment in education : a further update," Policy Research Working Paper Series 2881, The World Bank.
  6. Le Wang, 2013. "How Does Education Affect the Earnings Distribution in Urban China?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(3), pages 435-454, 06.
  7. Esfandiar Maasoumi & Daniel L. Millimet & Dipanwita Sarkar, 2008. "Who Benefits from Marriage?," Emory Economics, Department of Economics, Emory University (Atlanta) 0807, Department of Economics, Emory University (Atlanta).
  8. Henderson, Daniel J., 2008. "A Nonparametric Examination of Capital-Skill Complementarity," IZA Discussion Papers 3865, Institute for the Study of Labor (IZA).
  9. Monique de Haan, 2005. "Birth Order, Family Size and Educational Attainment," Tinbergen Institute Discussion Papers 05-116/3, Tinbergen Institute.
  10. Lei, Xiaoyan & Strauss, John & Tian, Meng & Zhao, Yaohui, 2011. "Living Arrangements of the Elderly in China: Evidence from CHARLS," IZA Discussion Papers 6249, Institute for the Study of Labor (IZA).
  11. Flabbi, Luca & Paternostro, Stefano & Tiongson, Erwin R., 2007. "Returns to education in the economic transition : a systematic assessment using comparable data," Policy Research Working Paper Series 4225, The World Bank.
  12. G. Reza Arabsheibani & Altay Mussurov, 2007. "Returns to schooling in Kazakhstan," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 15(2), pages 341-364, 04.
  13. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, Elsevier, vol. 9(1), pages 1-16, February.
  14. Heckman, James J. & Li, Xuesong, 2003. "Selection Bias, Comparative Advantage and Heterogeneous Returns to Education: Evidence from China in 2000," IZA Discussion Papers 829, Institute for the Study of Labor (IZA).
  15. Lee, Myoung-jae, 2005. "Micro-Econometrics for Policy, Program and Treatment Effects," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199267699, October.
  16. repec:dgr:uvatin:2010075 is not listed on IDEAS
  17. Lennart Hoogerheide & Joern H. Block & Roy Thurik, 2010. "Family Background Variables as Instruments for Education in Income Regressions: A Bayesian Analysis," Tinbergen Institute Discussion Papers 10-075/3, Tinbergen Institute.
  18. Wenshu Gao & Russell Smyth, 2009. "Economic Returns to Speaking ‘Standard Mandarin’ Among Migrants in China’s Urban Labour Market," Development Research Unit Working Paper Series, Monash University, Department of Economics 28-09, Monash University, Department of Economics.
  19. Markus Fr–lich, 2004. "Programme Evaluation with Multiple Treatments," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 18(2), pages 181-224, 04.
  20. Fleisher, Belton M. & Hu, Yifan & Li, Haizheng & Kim, Seonghoon, 2011. "Economic transition, higher education and worker productivity in China," Journal of Development Economics, Elsevier, Elsevier, vol. 94(1), pages 86-94, January.
  21. Wang, Xiaojun & Fleisher, Belton M. & Li, Haizheng & Li, Shi, 2007. "Access to Higher Education and Inequality: The Chinese Experiment," IZA Discussion Papers 2823, Institute for the Study of Labor (IZA).
  22. Daniel J. Henderson & Chris Papageorgiou & Christopher F. Parmeter, 2012. "Growth Empirics without Parameters," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 122(559), pages 125-154, 03.
  23. Cheng Hsiao & Qi Li & Jeff Racine, 2006. "A Consistent Model Specification Test with Mixed Discrete and Continuous Data," IEPR Working Papers, Institute of Economic Policy Research (IEPR) 06.47, Institute of Economic Policy Research (IEPR).
  24. Abbigail J. Chiodo & Michael T. Owyang, 2002. "For love or money: why married men make more," The Regional Economist, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue Apr, pages 10-11.
  25. CHEN, Guifu & HAMORI, Shigeyuki, 2009. "Economic returns to schooling in urban China: OLS and the instrumental variables approach," China Economic Review, Elsevier, Elsevier, vol. 20(2), pages 143-152, June.
  26. Qi Li & Jeffrey Scott Racine, 2006. "Nonparametric Econometrics: Theory and Practice," Economics Books, Princeton University Press, Princeton University Press, edition 1, volume 1, number 8355.
  27. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, Econometric Society, vol. 46(6), pages 1251-71, November.
  28. Haizheng Li & Yi Luo, 2004. "Reporting errors, ability heterogeneity, and returns to schooling in China," Pacific Economic Review, Wiley Blackwell, Wiley Blackwell, vol. 9(3), pages 191-207, October.
  29. Peter Hall & Qi Li & Jeffrey S. Racine, 2007. "Nonparametric Estimation of Regression Functions in the Presence of Irrelevant Regressors," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 784-789, November.
  30. Li, Haizheng, 2003. "Economic transition and returns to education in China," Economics of Education Review, Elsevier, Elsevier, vol. 22(3), pages 317-328, June.
  31. Racine, Jeff & Li, Qi, 2004. "Nonparametric estimation of regression functions with both categorical and continuous data," Journal of Econometrics, Elsevier, Elsevier, vol. 119(1), pages 99-130, March.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp7103. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.