Whose education matters in the determination of household income
This paper aims to answer how best to model education attainment, which is an individual-level variable, in household-level income functions. The accepted practice in the literature is to use the education level of the household head. This paper compares the head-of-household model to three competing models and concludes that the maximum or average level of education in the household is a better explanatory variable of household income. Least absolute deviations (LAD) estimators and censored least absolute deviations (CLAD) estimators are used to predict income. Standard errors, which are robust to violations of homoscedasticity and independence, are generated by a boot-strap method that replicates the two-stage sample design.
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- Psacharopoulos, George, 1993.
"Returns to investment in education : a global update,"
Policy Research Working Paper Series
1067, The World Bank.
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- Jolliffe, Dean, 1998. "Skills, Schooling, and Household Income in Ghana," World Bank Economic Review, World Bank Group, vol. 12(1), pages 81-104, January.
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- George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
- Pagan, Adrian & Vella, Frank, 1989. "Diagnostic Tests for Models Based on Individual Data: A Survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages S29-59, Supplemen.
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