Biases in Twin Estimates of the Return to Schooling: A Note on Recent Research
AbstractAshenfelter and Krueger's (1993) within-twin, measurement-error- corrected estimate of the return to schooling is about 13-16 percent. If their estimate is unbiased, then their results imply considerable downward measurement error bias in uncorrected within-twin estimates of the return to schooling, and considerable downward omitted ability bias in cross-section estimates. This note points out that if there are ability differences among twins, then AK's IV estimator exacerbates the omitted ability bias in the within-twin estimate. Thus, upward omitted ability bias in within-twin estimates may provide an alternative explanation of the surprisingly high estimates of the return to schooling that AK obtain, and permit their results to be reconciled with upward, rather than downward omitted ability bias in cross-section estimates.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Technical Working Papers with number 0158.
Date of creation: Jun 1994
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Publication status: published as Neumark, David. "Biases In Twin Estimates Of The Return To Schooling," Education of Economics Review, 1999, v18(2,Apr), 143-148.
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