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Learning About Heterogeneity in Returns to Schooling

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  • Koop, Gary M
  • Tobias, Justin

Abstract

Using data from the National Longitudinal Survey of Youth (NLSY) we introduce and estimate various Bayesian hierarchical models that investigate the nature of unobserved heterogeneity in returns to schooling. We consider a variety of possible forms for the heterogeneity, some motivated by previous theoretical and empirical work and some new ones, and let the data decide among the competing specifications. Empirical results indicate that heterogeneity is present in returns to education. Furthermore, we find strong evidence that the heterogeneity follows a continuous rather than discrete distribution, and that bivariate Normality provides a very reasonable description of individual-level heterogeneity in intercepts and returns to schooling.

Suggested Citation

  • Koop, Gary M & Tobias, Justin, 2004. "Learning About Heterogeneity in Returns to Schooling," Staff General Research Papers Archive 12008, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:12008
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    Citations

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    Cited by:

    1. Patrawart, Kraiyos, 2008. "Can Equality in Education Be A New Anti-Corruption Tool?: Cross-Country Evidence (1990-2005)," MPRA Paper 9665, University Library of Munich, Germany.
    2. Garth Holloway & Donald Lacombe & James P. LeSage, 2007. "Spatial Econometric Issues for Bio-Economic and Land-Use Modelling," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(3), pages 549-588, September.
    3. Deniz Ozabaci & Daniel Henderson, 2015. "Additive kernel estimates of returns to schooling," Empirical Economics, Springer, pages 227-251.
    4. Luca Favero & Andreina Fucci, 2017. "The Erasmus effect on earnings: a panel analysis from Siena," Department of Economics University of Siena 762, Department of Economics, University of Siena.
    5. Deniz Ozabaci & Daniel Henderson, 2015. "Additive kernel estimates of returns to schooling," Empirical Economics, Springer, pages 227-251.
    6. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Earnings Differentials and Returns to Education in China, 1995-2008," IZA Discussion Papers 7349, Institute for the Study of Labor (IZA).
    7. repec:eee:labeco:v:48:y:2017:i:c:p:87-104 is not listed on IDEAS
    8. Li, Mingliang & Tobias, Justin L., 2011. "Bayesian inference in a correlated random coefficients model: Modeling causal effect heterogeneity with an application to heterogeneous returns to schooling," Journal of Econometrics, Elsevier, pages 345-361.
    9. repec:spr:jlabre:v:38:y:2017:i:3:d:10.1007_s12122-017-9245-8 is not listed on IDEAS
    10. Marianna Belloc & Ugo Pagano, 2008. "Politics-Business Interaction Paths," Working Papers 109, University of Rome La Sapienza, Department of Public Economics.
    11. Henderson, Daniel J. & Polachek, Solomon W. & Wang, Le, 2011. "Heterogeneity in schooling rates of return," Economics of Education Review, Elsevier, pages 1202-1214.
    12. Koop, Gary M & Tobias, Justin, 2006. "Semiparametric Bayesian Inference in Smooth Coefficient Models," Staff General Research Papers Archive 12202, Iowa State University, Department of Economics.
    13. Balestra, Simone & Backes-Gellner, Uschi, 2017. "Heterogeneous returns to education over the wage distribution: Who profits the most?," Labour Economics, Elsevier, vol. 44(C), pages 89-105.
    14. Koop, Gary & Tobias, Justin L., 2006. "Semiparametric Bayesian inference in smooth coefficient models," Journal of Econometrics, Elsevier, pages 283-315.
    15. Simone Balestra & Uschi Backes-Gellner, 2013. "Heterogeneous Returns to Education Over Wage Distribution: Who Profits the Most?," Economics of Education Working Paper Series 0091, University of Zurich, Department of Business Administration (IBW), revised Dec 2013.
    16. Tsionas, Efthymios G., 2012. "Maximum likelihood estimation of stochastic frontier models by the Fourier transform," Journal of Econometrics, Elsevier, pages 234-248.
    17. Daniel J. Henderson & Andrew Houtenville & Le Wang, 2017. "The Distribution of Returns to Education for People with Disabilities," Journal of Labor Research, Springer, vol. 38(3), pages 261-282, September.
    18. RĂ©mi Piatek & Pia Pinger, 2016. "Maintaining (Locus of) Control? Data Combination for the Identification and Inference of Factor Structure Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(4), pages 734-755, June.
    19. Biewen, Martin & Tapalaga, Madalina, 2017. "Early Tracking, Academic vs. Vocational Training and the Value of 'Second Chance' Options," IZA Discussion Papers 11080, Institute for the Study of Labor (IZA).
    20. Joshua C. C. Chan, 2005. "Replication of the results in 'learning about heterogeneity in returns to schooling'," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(3), pages 439-443.

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