Can education compensate for low ability? Evidence from British data
This article investigates whether the returns to education vary with the level of cognitive ability. Unlike much of the literature, this article finds that the return to schooling is lower for those with higher cognitive ability indicating that education can act as a substitute for observed ability. Using quantile regressions we also find that, again unlike most of the literature, returns are higher at lower quintiles of the conditional earnings distribution. This suggests that education is also a substitute for unobserved ability. The policy implications are that increasing education in general and particularly for those with lower ability should reduce income inequality.
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Volume (Year): 14 (2007)
Issue (Month): 9 ()
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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.:
- McKinley L. Blackburn & David Neumark, 1991.
"Omitted-Ability Bias and the Increase in the Return to Schooling,"
NBER Working Papers
3693, National Bureau of Economic Research, Inc.
- 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.
- Griliches, Zvi & Mason, William M, 1972. "Education, Income, and Ability," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 74-103, Part II, .
- Tobias, Justin, 2001.
"Are Returns to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability-Earnings Relationships,"
Staff General Research Papers Archive
12016, Iowa State University, Department of Economics.
- Tobias, J.L., 2000. "Are Return to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability-Earnings Relationship," Papers 00-01-12, California Irvine - School of Social Sciences.
- James Heckman & Pedro Carneiro, 2003.
"Human Capital Policy,"
NBER Working Papers
9495, National Bureau of Economic Research, Inc.
- Dearden, Lorraine, 1999. "The effects of families and ability on men's education and earnings in Britain1," Labour Economics, Elsevier, vol. 6(4), pages 551-567, November.
- Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
- 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.
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