Alternative Instruments for Institutional Quality and the Effect of European Settlements on Economic Development
AbstractThis paper uses cross section data to investigate whether education and ability are substitutes or complements in the determination of earnings. Using a measure of cognitive ability based on tests taken at ages 7 and 11 we find, unlike most of the existing literature, clear evidence that the return to schooling is lower for those with higher ability indicating that education can act as a substitute for observed ability. We also estimate quantile regression functions to examine how the return to schooling varies across the conditional distribution of earnings. The results show that the return is lower for higher quantiles, suggesting that education is also a substitute for unobserved ability.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200420.
Length: 11 pages
Date of creation: 07 Jun 2004
Date of revision:
earnings; education; ability;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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