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Zvi Griliches' Contribution to the Theory of Human Capital

In: Contributions in Memory of Zvi Griliches

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  • Reuben Gronau

Abstract

The paper discusses Zvi Griliches' contribution to the estimation of the earning function. The topic was the central theme of Griliches' research agenda during the 70s. Griliches played a major role in the ability- schooling controversy of the time. He was instrumental in repelling the attack of the revisionists' on the Theory of Human Capital, and the claim that the schooling effect in the earning function is merely an artifact of the true ability' and family background' effects. Griliches lacked at the time the proper data to prove unequivocally that the ability bias plays only a minor role in the estimation of the rate of return to schooling. He was, however, able to show that the seemingly foolproof evidence of his opponents suffers from serious biases due to the endogeneity and the measurement errors in the schooling variable. His assertion that the standard OLS estimator is biased downward, rather than upward, has been shown true by future research.
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Suggested Citation

  • Reuben Gronau, 2010. "Zvi Griliches' Contribution to the Theory of Human Capital," NBER Chapters, in: Contributions in Memory of Zvi Griliches, pages 275-297, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:12236
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    Cited by:

    1. Sonja C. Kassenboehmer & Stefanie Schurer, 2018. "Survey item-response behavior as an imperfect proxy for unobserved ability: Theory and application," Working Papers 2018-035, Human Capital and Economic Opportunity Working Group.
    2. Gootzeit, Michael J. & Okunade, Albert A., 2004. "Zvi Griliches as a qualified humanitarian: his thoughts on quantifying technological change and productivity," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(3), pages 464-473, July.
    3. Deng, Binbin, 2010. "Schooling and Wage Revisited: Does Higher IQ Really Give You Higher Income?," MPRA Paper 23206, University Library of Munich, Germany.

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    JEL classification:

    • B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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