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Ability Bias, Skewness and the College Wage Premium

Author

Listed:
  • Naylor, Robin A.

    (Department of Economics, University of Warwick)

  • Smith, Jeremy

    (Department of Economics, University of Warwick)

Abstract

Changes in educational participation rates across cohorts are likely to imply changes in the ability-education relationship and thereby to impact on estimated returns to education. We show that skewness in the underlying ability distribution is a key determinant of the impact of graduate expansion on the college wage premium. Calibrating the model against the increased proportion of university students in Britain, we find that changes in the average ability gap between university students and others are likely to have mitigated demand-side forces.

Suggested Citation

  • Naylor, Robin A. & Smith, Jeremy, 2009. "Ability Bias, Skewness and the College Wage Premium," The Warwick Economics Research Paper Series (TWERPS) 907, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:907
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2009/twerp_907.pdf
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    References listed on IDEAS

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    1. Arulampalam, W. & Robin A. Naylor & Jeremy P. Smith, 2002. "University of Warwick," Royal Economic Society Annual Conference 2002 9, Royal Economic Society.
    2. Christopher R. Taber, 2001. "The Rising College Premium in the Eighties: Return to College or Return to Unobserved Ability?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(3), pages 665-691.
    3. 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 521-544, July.
    4. John Cawley & James Heckman & Edward Vytlacil, 1998. "Understanding the Role of Cognitive Ability in Accounting for the Recent Rise in the Economic Return to Education," NBER Working Papers 6388, National Bureau of Economic Research, Inc.
    5. Massimiliano BRATTI & Robin NAYLOR & Jeremy SMITH, 2008. "Heterogeneities in the returns to degrees: evidence from the British cohort study 1970," Departmental Working Papers 2008-40, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
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    Cited by:

    1. Francesc Obiols-Homs & Virginia Sánchez-Marcos, 2015. "Education, Occupation-Mismatch and Unemployment," Working Papers 807, Barcelona School of Economics.

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    More about this item

    Keywords

    Ability Bias ; College Wage Premium ; Graduate Returns ; Cohort Effects;
    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
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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