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Schooling and Wage Revisited: Does Higher IQ Really Give You Higher Income?

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  • Deng, Binbin
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    Abstract

    Traditional studies of returns-to-schooling have been generally concerned with several issues like the omitted variable bias, error-in-measurement bias and the endogeneity of schooling. While such inquiries are of much empirical importance, this paper tries to ask a different but non-negligible question: what should be interpreted from the individual ability measure per se in the wage equation? With data from well documented national surveys in the U.S., this paper is able to make a simple but fundamental argument: IQ level per se, holding all other personal characteristics constant, has negligible net effect in determining one’s income level and thus should not be used as the proper measure of the ability we want to quantify in the wage-determining process, i.e., the very ability to earn income.

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    File URL: http://mpra.ub.uni-muenchen.de/23233/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23206.

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    Date of creation: 09 Jun 2010
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    Handle: RePEc:pra:mprapa:23206

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    Keywords: return to schooling; ability measure; insignificance of IQ; emotional intelligence;

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    20. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
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