IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Understanding the role of time-varying unobserved ability heterogeneity in education production

  • Ding, Weili
  • Lehrer, Steven F.

Unobserved ability heterogeneity has long been postulated to play a key role in human capital development. Traditional strategies to estimate education production functions do not allow for varying role or development of unobserved ability as a child ages. Such restrictions are highly inconsistent with a growing body of scientific evidence; moreover, in order to obtain unbiased parameter estimates of observed educational inputs, researchers must properly account for unobserved skills that may be correlated with other inputs to the production process. To illustrate our empirical strategy we use experimental data from Tennessee's Student/Teacher Achievement Ratio experiment, known as Project STAR. We find that unobserved ability is endogenously developed over time and its impact on cognitive achievement varies significantly between grades in all subject areas. Moreover, we present evidence that accounting for time-varying unobserved ability across individuals and a more general depreciating pattern of observed inputs are both important when estimating education production functions.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S027277571400017X
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Economics of Education Review.

Volume (Year): 40 (2014)
Issue (Month): C ()
Pages: 55-75

as
in new window

Handle: RePEc:eee:ecoedu:v:40:y:2014:i:c:p:55-75
Contact details of provider: Web page: http://www.elsevier.com/locate/econedurev

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Flavio Cunha & James Heckman & Susanne Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," NBER Working Papers 15664, National Bureau of Economic Research, Inc.
  2. James Heckman, 2011. "Policies to foster human capital," Educational Studies, Higher School of Economics, issue 3, pages 73-137.
  3. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
  4. Hanushek, E-A & Rivkin, S-G & Taylor, L-L, 1995. "Aggregation and the Estimated Effects of School Resources," RCER Working Papers 397, University of Rochester - Center for Economic Research (RCER).
  5. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  6. Jesse Rothstein, 2008. "Teacher Quality in Educational Production: Tracking, Decay, and Student Achievement," NBER Working Papers 14442, National Bureau of Economic Research, Inc.
  7. Flavio Cunha & James J. Heckman, 2008. "Formulating, Identifying and Estimating the Technology of Cognitive and Noncognitive Skill Formation," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
  8. Victor Chernozhukov & Ivan Fernandez-Val & Alfred Galichon, 2007. "Quantile and probability curves without crossing," CeMMAP working papers CWP10/07, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  9. Arleen Leibowitz, 1974. "Home Investments in Children," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 432-456 National Bureau of Economic Research, Inc.
  10. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  11. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
  12. James Heckman & Pedro Carneiro, 2003. "Human Capital Policy," NBER Working Papers 9495, National Bureau of Economic Research, Inc.
  13. Harding, Matthew & Lamarche, Carlos, 2011. "Least squares estimation of a panel data model with multifactor error structure and endogenous covariates," Economics Letters, Elsevier, vol. 111(3), pages 197-199, June.
  14. Harding, Matthew & Lamarche, Carlos, 2014. "Estimating and testing a quantile regression model with interactive effects," Journal of Econometrics, Elsevier, vol. 178(P1), pages 101-113.
  15. Eric I. Knudsen & James J. Heckman & Judy L. Cameron & Jack P. Shonkoff, 2006. "Economic, Neurobiological and Behavioral Perspectives on Building America's Future Workforce," NBER Working Papers 12298, National Bureau of Economic Research, Inc.
  16. Vasilis Sarafidis & Donald Robertson, 2009. "On the impact of error cross-sectional dependence in short dynamic panel estimation," Econometrics Journal, Royal Economic Society, vol. 12(1), pages 62-81, 03.
  17. Weili Ding & Steven F. Lehrer, 2010. "Estimating Treatment Effects from Contaminated Multiperiod Education Experiments: The Dynamic Impacts of Class Size Reductions," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 31-42, February.
  18. Chernozhukov, Victor & Hansen, Christian, 2008. "Instrumental variable quantile regression: A robust inference approach," Journal of Econometrics, Elsevier, vol. 142(1), pages 379-398, January.
  19. Khwaja, Asim Ijaz & Andrabi, Tahir & Das, Jishnu & Zajonc, Tristan, 2009. "Do Value-Added Estimates Add Value? Accounting for Learning Dynamics," Scholarly Articles 4435671, Harvard Kennedy School of Government.
  20. Jushan Bai, 2009. "Panel Data Models With Interactive Fixed Effects," Econometrica, Econometric Society, vol. 77(4), pages 1229-1279, 07.
  21. Ding, Weili & Lehrer, Steven F., 2011. "Experimental Estimates of the Impacts of Class Size on Test Scores: Robustness and Heterogeneity," CLSSRN working papers clsrn_admin-2011-12, Vancouver School of Economics, revised 26 Jun 2011.
  22. Leibowitz, Arleen, 1974. "Home Investments in Children," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages S111-S131, Part II, .
  23. James Heckman & Edward Vytlacil, 2000. "Identifying the Role of Cognitive Ability in Explaining the Level of and Change in the Return to Schooling," NBER Working Papers 7820, National Bureau of Economic Research, Inc.
  24. Hansen, Karsten T & Heckman, James J & Mullen, Kathleen J, 2003. "The effect of schooling and ability on achievement test scores," Working Paper Series 2003:13, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  25. David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," NBER Working Papers 3358, National Bureau of Economic Research, Inc.
  26. Guido W. Imbens & Whitney K. Newey, 2002. "Identification and Estimation of Triangular Simultaneous Equations Models Without Additivity," NBER Technical Working Papers 0285, National Bureau of Economic Research, Inc.
  27. Eric A. Hanushek, 1979. "Conceptual and Empirical Issues in the Estimation of Educational Production Functions," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 351-388.
  28. Flavio Cunha & James J. Heckman & Lance Lochner & Dimitriy V. Masterov, 2005. "Interpreting the Evidence on Life Cycle Skill Formation," NBER Working Papers 11331, National Bureau of Economic Research, Inc.
  29. Petra E. Todd & Kenneth I. Wolpin, 2004. "The Production of Cognitive Achievement in Children: Home, School and Racial Test Score Gaps," PIER Working Paper Archive 04-019, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  30. Alan B. Krueger, 1997. "Experimental Estimates of Education Production Functions," NBER Working Papers 6051, National Bureau of Economic Research, Inc.
  31. Richard J. Murnane & John B. Willett & Frank Levy, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," NBER Working Papers 5076, National Bureau of Economic Research, Inc.
  32. Becketti, Sean, et al, 1988. "The Panel Study of Income Dynamics after Fourteen Years: An Evaluatio n," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 472-92, October.
  33. Ivan A. Canay, 2011. "A simple approach to quantile regression for panel data," Econometrics Journal, Royal Economic Society, vol. 14(3), pages 368-386, October.
  34. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  35. Harding, Matthew & Lamarche, Carlos, 2009. "A quantile regression approach for estimating panel data models using instrumental variables," Economics Letters, Elsevier, vol. 104(3), pages 133-135, September.
  36. Eric Knudsen & James J. Heckman & Judy Cameron & Jack P. Shonkoff, 2006. "Economic, Neurobiological and Behavioral Perspectives on Building America’s Future Workforce," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 7(3), pages 17-41, July.
  37. Arleen Leibowitz, 1974. "Home Investments in Children," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 111-135 National Bureau of Economic Research, Inc.
  38. Petra E. Todd & Kenneth I. Wolpin, 2003. "On The Specification and Estimation of The Production Function for Cognitive Achievement," Economic Journal, Royal Economic Society, vol. 113(485), pages F3-F33, February.
  39. Robert Haveman & Barbara Wolfe, 1995. "The Determinants of Children's Attainments: A Review of Methods and Findings," Journal of Economic Literature, American Economic Association, vol. 33(4), pages 1829-1878, December.
  40. Figlio, David N., 1999. "Functional form and the estimated effects of school resources," Economics of Education Review, Elsevier, vol. 18(2), pages 241-252, April.
  41. repec:spo:wpecon:info:hdl:2441/5rkqqmvrn4tl22s9mc4b6ga2g is not listed on IDEAS
  42. Yamagata, Takashi, 2008. "A joint serial correlation test for linear panel data models," Journal of Econometrics, Elsevier, vol. 146(1), pages 135-145, September.
  43. Victor Chernozhukov & Christian Hansen, 2005. "An IV Model of Quantile Treatment Effects," Econometrica, Econometric Society, vol. 73(1), pages 245-261, 01.
  44. Dewey, James & Husted, Thomas A. & Kenny, Lawrence W., 1999. "The ineffectiveness of school inputs: a product of misspecification?," Economics of Education Review, Elsevier, vol. 19(1), pages 27-45, February.
  45. Sean Becketti & William Gould & Lee Lillard & Finis Welch, 1985. "The Panel Study of Income Dynamics After Fourteen Years: An Evaluation," UCLA Economics Working Papers 361, UCLA Department of Economics.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:ecoedu:v:40:y:2014:i:c:p:55-75. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.