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Smoking, discount rates, and returns to education

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Abstract

Individual time preference determines schooling enrolment. Moreover, smoking behavior in early ages has been shown to be highly related to time preference rates. Accordingly, we use smoking at age 16 as an instrument for schooling in order to cope with ability bias in a returns to education regression. Doing this for Austrian cross-sectional data, we find no evidence of ability bias.

Suggested Citation

  • Josef Fersterer & Rudolf Winter-Ebmer, 2000. "Smoking, discount rates, and returns to education," Economics working papers 2000-02, Department of Economics, Johannes Kepler University Linz, Austria.
    • Handle: RePEc:jku:econwp:2000_02
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    More about this item

    Keywords

    returns to education; instrumental variables; ability bias; discount rates;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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