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Measurement Error Bias In Returns To Education: Evidence From A Developing Country - Sri Lanka


  • Rasika Ranasinghe

    () (Department of Economics, Connecticut College)

  • Thomas Hertz

    () (Department of Economics, American University)


There is a continuing debate about the size and direction of the bias in estimates of returns to education. Evidence from developing countries is particularly scarce. This paper addresses the problem of measurement error bias in returns to schooling for Sri Lanka, by exploiting dual measurements of reported schooling for a sub-sample of the data and deriving a reliability estimate of schooling. This is used to obtain measurement error corrected fixed effects estimates of the proportionate increase associated with an additional level of schooling. This corrected measure is 5.5%, which is less than the OLS estimate of 7.8% for two person households.

Suggested Citation

  • Rasika Ranasinghe & Thomas Hertz, 2008. "Measurement Error Bias In Returns To Education: Evidence From A Developing Country - Sri Lanka," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 33(2), pages 107-124, December.
  • Handle: RePEc:jed:journl:v:33:y:2008:i:2:p:107-124

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    Rate of Return; Economic Development; Educational Economics; Human Capital;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East


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