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Schooling and Wage Revisited: Does Higher IQ Really Give You Higher Income?

  • Deng, Binbin
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    Traditional studies of returns-to-schooling have been generally concerned with several issues like the omitted variable bias, error-in-measurement bias and the endogeneity of schooling. While such inquiries are of much empirical importance, this paper tries to ask a different but non-negligible question: what should be interpreted from the individual ability measure per se in the wage equation? With data from well documented national surveys in the U.S., this paper is able to make a simple but fundamental argument: IQ level per se, holding all other personal characteristics constant, has negligible net effect in determining one’s income level and thus should not be used as the proper measure of the ability we want to quantify in the wage-determining process, i.e., the very ability to earn income.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23206.

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    Date of creation: 09 Jun 2010
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    Handle: RePEc:pra:mprapa:23206
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    17. Reuben Gronau, 2003. "Zvi Griliches' Contribution to the Theory of Human Capital," NBER Working Papers 10081, National Bureau of Economic Research, Inc.
    18. M. Arrazola & J. De Hevia & M. Risueno & J. F. Sanz, 2003. "Returns to education in Spain: Some evidence on the endogeneity of schooling," Education Economics, Taylor & Francis Journals, vol. 11(3), pages 293-304.
    19. Rummery, Sarah & Vella, Francis & Verbeek, Marno, 1999. "Estimating the returns to education for Australian youth via rank-order instrumental variables," Labour Economics, Elsevier, vol. 6(4), pages 491-507, November.
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