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Are Returns to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability-Earnings Relationships

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  • Tobias, Justin

Abstract

In this paper, I explore the ability-earnings relationships semiparametrically. I find evidence of nonlinearities in these relationships which vary across levels of schooling, and argue that ability-sorting into higher education creates problems for accurately identifying the return to schooling over the full ability support. Over an ability support which is ``common'' to those with and without a college education, we find that the college log wage premium is increasing for the more able, and this premium grew during the period 1984-1994 for individuals at all points in the ability distribution. Further, the growth of this wage premium appears to have followed a ``smoother'' path for high-ability individuals than individuals of lower ability.

Suggested Citation

  • Tobias, Justin, 2001. "Are Returns to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability-Earnings Relationships," Staff General Research Papers Archive 12016, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12016
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    Cited by:

    1. Darío Maldonado, 2008. "Education policies and optimal taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(2), pages 131-143, April.
    2. Kevin Denny & Vincent O'sullivan, 2007. "Can education compensate for low ability? Evidence from British data," Applied Economics Letters, Taylor & Francis Journals, vol. 14(9), pages 657-660.
    3. Black, Dan A. & Smith, J.A.Jeffrey A., 2004. "How robust is the evidence on the effects of college quality? Evidence from matching," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 99-124.
    4. Eliasson, Kent, 2006. "The Role of Ability in Estimating the Returns to College Choice: New Swedish Evidence," Umeå Economic Studies 691, Umeå University, Department of Economics.
    5. Koop, Gary & Tobias, Justin L., 2006. "Semiparametric Bayesian inference in smooth coefficient models," Journal of Econometrics, Elsevier, vol. 134(1), pages 283-315, September.
    6. Kevin Denny & Orla Doyle, 2005. "Returns to basic skills in Central & Eastern Europe : a semi parametric approach," Working Papers 200507, School of Economics, University College Dublin.
    7. David Newhouse & Daniel Suryadarma, 2011. "The Value of Vocational Education: High School Type and Labor Market Outcomes in Indonesia," World Bank Economic Review, World Bank Group, vol. 25(2), pages 296-322, May.
    8. Eric Bettinger, 2004. "How Financial Aid Affects Persistence," NBER Chapters,in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 207-238 National Bureau of Economic Research, Inc.
    9. John DiNardo & Justin L. Tobias, 2001. "Nonparametric Density and Regression Estimation," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 11-28, Fall.
    10. Bernarda Zamora Talaya & Eduard Gracia, 2007. "Nature, nurture and market conditions: Ability and education in the policy evaluation approach," Working Papers. Serie AD 2007-29, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    11. Astrid Krenz, 2008. "Theorie und Empirie über den Wirkungszusammenhang zwischen sozialer Herkunft, kulturellem und sozialem Kapital, Bildung und Einkommen in der Bundesrepublik Deutschland," SOEPpapers on Multidisciplinary Panel Data Research 128, DIW Berlin, The German Socio-Economic Panel (SOEP).
    12. Cornelissen Thomas & Jirjahn Uwe & Tsertsvadze Georgi, 2008. "Parental Background and Earnings: German Evidence on Direct and Indirect Relationships," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(5-6), pages 554-572, October.

    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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