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Estimating the Returns to Education Using a Sample of Twins - The case of Japan -

  • NAKAMURO Makiko
  • INUI Tomohiko
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    The objective of this paper is to measure the causal effect of education on earnings using a sample of twins in Japan, with information collected through a web-based survey. The empirical results show that although the conventional OLS estimate is 10.0%, we obtain 9.3% as the estimated rate of return to education after the omitted ability bias and measurement errors in self-reported schooling were corrected. Our findings suggest that the conventional OLS estimate is not largely contaminated by potential biases.

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    File URL: http://www.rieti.go.jp/jp/publications/dp/12e076.pdf
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    Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 12076.

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    Length: 27 pages
    Date of creation: Dec 2012
    Date of revision:
    Handle: RePEc:eti:dpaper:12076
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    1. Behrman, Jere R. & Rosenzweig, Mark R., 1999. ""Ability" biases in schooling returns and twins: a test and new estimates," Economics of Education Review, Elsevier, vol. 18(2), pages 159-167, April.
    2. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
    3. Cornwell, Christopher & Rupert, Peter, 1997. "Unobservable Individual Effects, Marriage and the Earnings of Young Men," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 285-94, April.
    4. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-66, May.
    5. Bonjour, Dorothe & Cherkas, Lynn & Haskel, Jonathan & Spector, Tim, 2002. "Returns to Education: Evidence from UK Twins," CEPR Discussion Papers 3354, C.E.P.R. Discussion Papers.
    6. Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1994. "Endowments and the Allocation of Schooling in the Family and in the Marriage Market: The Twins Experiment," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1131-74, December.
    7. Tachibanaki, Toshiaki, 1988. "Education, occupation, hierarchy and earnings," Economics of Education Review, Elsevier, vol. 7(2), pages 221-229, April.
    8. John Bound & Gary Solon, 1998. "Double Trouble: On the Value of Twins-Based Estimation of the Return to Schooling," NBER Working Papers 6721, National Bureau of Economic Research, Inc.
    9. Rouse, Cecilia Elena, 1999. "Further estimates of the economic return to schooling from a new sample of twins," Economics of Education Review, Elsevier, vol. 18(2), pages 149-157, April.
    10. Eric A. Hanushek, 2003. "The Failure of Input-Based Schooling Policies," Economic Journal, Royal Economic Society, vol. 113(485), pages F64-F98, February.
    11. Gunnar Isacsson, 2004. "Estimating the economic return to educational levels using data on twins," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(1), pages 99-119.
    12. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    13. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    14. Alan Krueger & Orley Ashenfelter, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," NBER Working Papers 4143, National Bureau of Economic Research, Inc.
    15. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, vol. 9(1), pages 1-16, February.
    16. Hashimoto, Masanori & Raisian, John, 1985. "Employment Tenure and Earnings Profiles in Japan and the United States," American Economic Review, American Economic Association, vol. 75(4), pages 721-35, September.
    17. Sanders Korenman & David Neumark, 1991. "Does Marriage Really Make Men More Productive?," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 282-307.
    18. Orley Ashenfelter & Cecilia Rouse, 1997. "Income, Schooling, and Ability: Evidence from a New Sample of Identical Twins," NBER Working Papers 6106, National Bureau of Economic Research, Inc.
    19. Joni Hersch & Leslie S. Stratton, 1997. "Housework, Fixed Effects, and Wages of Married Workers," Journal of Human Resources, University of Wisconsin Press, vol. 32(2), pages 285-307.
    20. Miller, Paul W & Mulvey, Charles & Martin, Nick, 1995. "What Do Twins Studies Reveal about the Economic Returns to Education? A Comparison of Australian and U.S. Findings," American Economic Review, American Economic Association, vol. 85(3), pages 586-99, June.
    21. Isacsson, Gunnar, 1999. "Estimates of the return to schooling in Sweden from a large sample of twins," Labour Economics, Elsevier, vol. 6(4), pages 471-489, November.
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