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Estimates of the causal effects of education on earnings over the lifecycle with cohort effects and endogenous education

  • Giuseppe Migali
  • Ian Walker

This paper acknowledges that the relationship between log wages and schooling is considerably more complex than the simple human capital earnings function suggests and that schooling is endogenous. We estimate a model where educational attainment is discrete and ordered and log wages are determined by a simple function of work experience for each level of attainment. We distinguish between lifecycle and cohort effects by exploiting the fact that we have a short panel. We strongly reject both the usual separability assumption and exogeneity of educational attainment.

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File URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/CausalEffectsEducationEarnings.pdf
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Paper provided by Lancaster University Management School, Economics Department in its series Working Papers with number 2248796.

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Date of creation: 2011
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Handle: RePEc:lan:wpaper:2248796
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  18. Hoogerheide, Lennart & Kleibergen, Frank & van Dijk, Herman K., 2007. "Natural conjugate priors for the instrumental variables regression model applied to the Angrist-Krueger data," Journal of Econometrics, Elsevier, vol. 138(1), pages 63-103, May.
  19. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S7-36, October.
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  24. Kenny, Lawrence W, et al, 1979. "Returns to College Education: An Investigation of Self-Selection Bias Based on the Project Talent Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(3), pages 775-89, October.
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