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The co-twin methodology and returns to schooling — testing a critical assumption

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  • Sandewall, Örjan
  • Cesarini, David
  • Johannesson, Magnus

Abstract

Twins-based estimates of the return to schooling have featured prominently in the economics of education literature. Their unbiasedness hinges critically on the assumption that within-pair variation in schooling is explained by factors unrelated to wage earning ability. This paper develops a framework for testing this assumption and shows, in a large sample of monozygotic twins, that the twins-based estimated return to schooling falls if adolescent IQ test scores are included in the wage equation. Using birth weight as an alternative proxy for ability yields qualitatively similar results. Our results thus cast doubt on the validity of twins-based estimates.

Suggested Citation

  • Sandewall, Örjan & Cesarini, David & Johannesson, Magnus, 2014. "The co-twin methodology and returns to schooling — testing a critical assumption," Labour Economics, Elsevier, vol. 26(C), pages 1-10.
  • Handle: RePEc:eee:labeco:v:26:y:2014:i:c:p:1-10
    DOI: 10.1016/j.labeco.2013.10.002
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    Cited by:

    1. Böckerman, Petri & Ilmakunnas, Pekka & Vainiomäki, Jari, 2014. "Using Twins to Resolve the Twin Problem of Having a Bad Job and a Low Wage," IZA Discussion Papers 8557, Institute for the Study of Labor (IZA).
    2. Petter Lundborg & Carl Hampus Lyttkens & Paul Nystedt, 2016. "The Effect of Schooling on Mortality: New Evidence From 50,000 Swedish Twins," Demography, Springer;Population Association of America (PAA), vol. 53(4), pages 1135-1168, August.
    3. Vikesh Amin & Jere Behrman, 2014. "Do more-schooled women have fewer children and delay childbearing? Evidence from a sample of US twins," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(1), pages 1-31, January.
    4. repec:eee:ehbiol:v:28:y:2018:i:c:p:53-66 is not listed on IDEAS
    5. Amin, Vikesh & Lundborg, Petter & Rooth, Dan-Olof, 2015. "The intergenerational transmission of schooling: Are mothers really less important than fathers?," Economics of Education Review, Elsevier, vol. 47(C), pages 100-117.
    6. Erik Plug & Dinand Webbink & Nick Martin, 2014. "Sexual Orientation, Prejudice, and Segregation," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 123-159.
    7. Petter Lundborg & Anton Nilsson & Dan-Olof Rooth, 2016. "The health-schooling relationship: evidence from Swedish twins," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 1191-1215, October.
    8. Berner Shalem, Rachel & Cornaglia, Francesca & De Neve, Jan-Emmanuel, 2012. "The enduring impact of childhood experience on mental health: evidence using instrumented co-twin data," LSE Research Online Documents on Economics 51522, London School of Economics and Political Science, LSE Library.
    9. Lundborg, Petter & Nordin, Martin & Rooth, Dan Olof, 2012. "The Intergenerational Transmission of Human Capital. The Role of Skills and Health," Working Papers 2012:22, Lund University, Department of Economics.
    10. Gerdtham, Ulf-G & Lundborg, Petter & Lyttkens, Carl Hampus & Nystedt, Paul, 2012. "Do Socioeconomic Factors Really Explain Income-Related Inequalities in Health? Applying a Twin Design to Standard Decomposition Analysis," Working Papers 2012:21, Lund University, Department of Economics.
    11. Mortensen, Laust H., 2013. "Socioeconomic inequality in birth weight and gestational age in Denmark 1996–2007: Using a family-based approach to explore alternative explanations," Social Science & Medicine, Elsevier, vol. 76(C), pages 1-7.
    12. Amin, Vikesh & Behrman, Jere R. & Spector, Tim D., 2013. "Does more schooling improve health outcomes and health related behaviors? Evidence from U.K. twins," Economics of Education Review, Elsevier, vol. 35(C), pages 134-148.
    13. Lundborg, Petter & Nordin, Martin & Rooth, Dan-Olof, 2011. "The Intergenerational Transmission of Human Capital: Exploring the Role of Skills and Health Using Data on Adoptees and Twins," IZA Discussion Papers 6099, Institute for the Study of Labor (IZA).
    14. Lundborg, Petter & Nilsson, Anton & Rooth, Dan-Olof, 2011. "Does Early Life Health Predict Schooling Within Twin Pairs?," IZA Discussion Papers 5803, Institute for the Study of Labor (IZA).
    15. repec:eee:joepsy:v:64:y:2018:i:c:p:116-129 is not listed on IDEAS

    More about this item

    Keywords

    Returns to schooling; Twins; Equal ability assumption;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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