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Accounting for heterogeneous returns in sequential schooling decisions

  • Zamarro, Gema

This paper presents a method for estimating returns to multiple schooling levels taking into account that returns may be heterogeneous among agents and that educational decisions are made sequentially. A sequential decision model explicitly considers that the level of education is the result of previous schooling choices and so, the variation of supply-side instruments over time will emerge as a source of identification of the desired parameters. A test for heterogeneity in returns from sequential schooling decisions is developed and expressions for Marginal Treatment Effects are obtained in this context. Returns are estimated and tested from cross-sectional data from a Spanish household survey that contains rich family background information and useful instruments. This methodology is used to analyze possible effects of the 1970 reform of the Spanish education system.

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Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 156 (2010)
Issue (Month): 2 (June)
Pages: 260-276

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Handle: RePEc:eee:econom:v:156:y:2010:i:2:p:260-276
Contact details of provider: Web page: http://www.elsevier.com/locate/jeconom

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  4. Carneiro, Pedro & Hansen, Karsten & Heckman, James, 2003. "Estimating distributions of treatment effects with an application to the returns to schooling and measurement of the effects of uncertainty on college choice," Working Paper Series 2003:9, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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