Omitted-Ability Bias and the Increase in the Return to Schooling
AbstractOver the 1980s there were sharp increases in the return to schooling estimated with conventional wage regressions. We use both a signaling model and a human capital model to explore how the relationship between ability and schooling could have changed over this period in ways Chat would have increased the schooling coefficient in these regressions. Our empirical results reject the hypothesis that an increase in the upward bias of the schooling coefficient, due to a change in the relationship between ability and schooling, underlies the observed increase in the return to education over the 1980s. We also find that the increase in the return to education has occurred largely for workers with relatively high levels of academic ability.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3693.
Date of creation: May 1991
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- Blackburn, McKinley L & Neumark, David, 1993. "Omitted-Ability Bias and the Increase in the Return to Schooling," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 521-44, July.
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