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Structural Estimates of the Intergenerational Education Correlation

Listed author(s):
  • Christian Belzil

    (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS - Centre National de la Recherche Scientifique, ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique, IZA - Institute for the Study of Labor)

Using a structural dynamic programming model, we investigate the relative importance of family background variables and individual specific abilities in explaining cross-sectional differences in schooling attainments and wages. Each type of ability is the sum of one component correlated with family background variables and a residual (orthogonal) component which is purely individual specific. Household background variables (especially parents' education) account for 68% of the explained cross-sectional variations in schooling attainments, while ability correlated with background variables accounts for 17% and pure individual specific ability accounts for 15%. Interestingly, individual differences in wages are mostly explained by pure individual specific abilities as they account for as much as 73% of the explained variations in wages. Family background variables account for only 19%, while ability endowments correlated with family background account for 8%.

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Paper provided by HAL in its series Post-Print with number hal-00541883.

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Date of creation: 2003
Publication status: Published in Journal of Applied Econometrics, Wiley, 2003, 18 (6), pp.679-696. <10.1002/jae.716>
Handle: RePEc:hal:journl:hal-00541883
DOI: 10.1002/jae.716
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00541883
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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  1. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
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