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Schooling, Intelligence, and Income in America: Cracks in the Bell Curve

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  • Orley Ashenfelter
  • Cecilia Rouse

Abstract

One of the best documented relationships in economics is the link between education and income: higher educated people have higher incomes. Advocates argue that education provides skills, or human capital, that raises an individual's productivity. Critics argue that the documented relationship is not causal. Education does not generate higher incomes; instead, individuals with higher ability receive more education and more income. This essay reviews the evidence on the relationship between education and income. We focus on recent studies that have attempted to determine the causal effect of education on income by either comparing income and education differences within families or using exogenous determinants of schooling in what are sometimes called natural experiments.' In addition, we assess the potential for education to reduce income disparities by presenting evidence on the return to education for people of differing family backgrounds and measured ability. The results of all these studies are surprisingly consistent: they indicate that the return to schooling is not caused by an omitted correlation between ability and schooling. Moreover, we find no evidence that the return to schooling differs significantly by family background or by the measured ability of the student.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6902.

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Date of creation: Jan 1999
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Publication status: published as (new title "Schooling, Intelligence, and Income in Mentocracy and Inequality") Arrow, Kenneth, Steven Durlarf and Samuel Bowles, eds., Princeton: Princeton University Press, 2000.
Handle: RePEc:nbr:nberwo:6902

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Cited by:
  1. Oddbjørn Raaum & Tom Erik Aabø, 2000. "The Effect of Schooling on Earnings: Evidence on the role of family background from a large sample of Norwegian twins," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 26, pages 95-113.
  2. Cockx, Bart, 2003. "Vocational Training of Unemployed Workers in Belgium," IZA Discussion Papers 682, Institute for the Study of Labor (IZA).
  3. Brunello, Giorgio & Comi, Simona & Lucifora, Claudio, 2000. "The Returns to Education in Italy: A New Look at the Evidence," IZA Discussion Papers 130, Institute for the Study of Labor (IZA).
  4. Cockx, Bart & Bardoulat, Isabelle, 1999. "Vocational Training: Does it speed up the Transition Rate out of Unemployment ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. Tullio Jappelli & Luigi Pistaferri, 2010. "Does Consumption Inequality Track Income Inequality in Italy?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 133-153, January.
  6. Raaum,O. & Aabo,T.E., 1999. "The effect of schooling on earnings : the role of family background studied by a large sample of Norwegian twins," Memorandum 16/1999, Oslo University, Department of Economics.
  7. Liang Zhao & Joyce P. Jacobsen, 2006. "Revisiting The Bell Curve Debate Regarding the Effects of Cognitive Ability on Wages," Wesleyan Economics Working Papers 2006-026, Wesleyan University, Department of Economics.
  8. Lee, Min-Dong Paul, 2006. "Widening Gap of Educational Opportunity? A Longitudinal Study of Educational Inequality in China," Working Paper Series RP2006/66, World Institute for Development Economic Research (UNU-WIDER).

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