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Zvi Griliches' Contribution to the Theory of Human Capital

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Reuben Gronau
Abstract

The paper discusses Zvi Griliches' contribution to the estimation of the earning function. The topic was the central theme of Griliches' research agenda during the 70s. Griliches played a major role in the ability- schooling controversy of the time. He was instrumental in repelling the attack of the revisionists' on the Theory of Human Capital, and the claim that the schooling effect in the earning function is merely an artifact of the true ability' and family background' effects. Griliches lacked at the time the proper data to prove unequivocally that the ability bias plays only a minor role in the estimation of the rate of return to schooling. He was, however, able to show that the seemingly foolproof evidence of his opponents suffers from serious biases due to the endogeneity and the measurement errors in the schooling variable. His assertion that the standard OLS estimator is biased downward, rather than upward, has been shown true by future research.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10081.

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Date of creation: Nov 2003
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Handle: RePEc:nbr:nberwo:10081

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B3 - Schools of Economic Thought and Methodology - - History of Thought: Individuals
C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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