The Roles of Education, Skill and Parental Income in Determining Wages

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The Roles of Education, Skill and Parental Income in Determining Wages

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Isaac C. Rischall

Abstract

This study attempts to examine how much of the correlation in incomes across generations can be explained by education and skill. I find two different answers to this question depending on how I instrument for years of schooling. Using quarter of birth and proximity to a local college as instruments, I find high returns to schooling, low returns to skill, and most of the intergenerational mobility coefficient explained. However, these instruments are poorly correlated with years of education. Thus, the estimates are imprecise and potentially biased. Furthermore, using family background variables as instruments, I find the opposite results.

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Paper provided by McMaster University in its series Canadian International Labour Network Working Papers with number 29.

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Length: 34 pages
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Handle: RePEc:mcm:cilnwp:29

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This paper has been announced in the following NEP Reports:

NEP-ALL-1999-01-25 (All new papers)

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Other versions:
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Other versions:
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Other versions:
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Other versions:
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Other versions:
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Other versions:
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Other versions:
- Nelson, C. & Startz, R., 1988. "Some Furthere Results On The Exact Small Sample Properties Of The Instrumental Variable Estimator," Working Papers 88-06, University of Washington, Department of Economics.
- Nelson, C. & Startz, R., 1988. "Some Furthere Results On The Exact Small Sample Properties Of The Instrumental Variable Estimator," Discussion Papers in Economics at the University of Washington 88-06, Department of Economics at the University of Washington.
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Other versions:
- Orley Ashenfelter & David Zimmerman, 1993. "Estimates of the Return to Schooling From Sibling Data: Fathers, Sons and Brothers," Working Papers 697, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
- Orley Ashenfelter & David J. Zimmerman, 1993. "Estimates of the Returns to Schooling From Sibling Data: Fathers, Sons and Brothers," NBER Working Papers 4491, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
David Card, 1994. "Earnings, Schooling, and Ability Revisited," NBER Working Papers 4832, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]

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