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Dispersion in the economic return to schooling

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  • Colm Harmon
  • Vincent (Vincent Peter) Hogan
  • Ian Walker

Abstract

We extend the standard human capital earnings function to include dispersion in the return to schooling by treating the return as a random coefficient. If the rapid expansion in participation in higher education has been brought about by dipping further into the ability distribution, we should observe a rise in the variance of returns. Alternatively, if the expansion has come about through relaxing credit constraints then we might expect to see an increase in both the mean and variance of returns. Our estimates suggest that the variance in returns has not risen over time.

Suggested Citation

  • Colm Harmon & Vincent (Vincent Peter) Hogan & Ian Walker, 2002. "Dispersion in the economic return to schooling," Open Access publications 10197/1101, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:oapubs:10197/1101
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Education--Economic aspects; Wages--Effect of education on; Labor supply--Effect of education on;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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