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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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    1. Alan Krueger & Orley Ashenfelter, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," NBER Working Papers 4143, National Bureau of Economic Research, Inc.
    2. McKinley L. Blackburn & David Neumark, 1993. "Are OLS Estimates of the Return to Schooling Biased Downward? Another Look," NBER Working Papers 4259, National Bureau of Economic Research, Inc.
    3. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, vol. 9(1), pages 1-16, February.
    4. Kenneth Law & Chi-Sum Wong & Guo-Hua Huang & Xiaoxuan Li, 2008. "The effects of emotional intelligence on job performance and life satisfaction for the research and development scientists in China," Asia Pacific Journal of Management, Springer, vol. 25(1), pages 51-69, January.
    5. Esther Duflo, 2001. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review, American Economic Association, vol. 91(4), pages 795-813, September.
    6. Lorraine Dearden & Barbara Sianesi, 2001. "Estimating the Returns to Education: Models, Methods and Results," CEE Discussion Papers 0016, Centre for the Economics of Education, LSE.
    7. Reuben Gronau, 2003. "Zvi Griliches' Contribution to the Theory of Human Capital," NBER Working Papers 10081, National Bureau of Economic Research, Inc.
    8. Denny, K.J. & Harmon, C.P., 2000. "Education Policy Reform and the Return to Schooling from Instrumental Variables," Papers 00/12, College Dublin, Department of Political Economy-.
    9. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    10. Klein, Roger & Vella, Francis, 2006. "Estimating the Return to Endogenous Schooling Decisions for Australian Workers via Conditional Second Moments," IZA Discussion Papers 2407, Institute for the Study of Labor (IZA).
    11. David Card, 1995. "The Wage Curve: A Review," Working Papers 722, Princeton University, Department of Economics, Industrial Relations Section..
    12. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-86, December.
    13. 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.
    14. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2000. "The returns to education : a review of evidence, issues and deficiencies in the literature," Open Access publications 10197/670, School of Economics, University College Dublin.
    15. Griliches, Zvi, 1976. "Wages of Very Young Men," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S69-85, August.
    16. Callan, T. & Harmon, C.P., 1997. "The Economic Return to Schooling in Ireland," Papers 97/23, College Dublin, Department of Political Economy-.
    17. 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.
    18. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2005. "Evaluating the effect of education on earnings: models, methods and results from the National Child Development Survey," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(3), pages 473-512.
    19. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
    20. Maluccio, John A., 1998. "Endogeneity of schooling in the wage function," FCND discussion papers 54, International Food Policy Research Institute (IFPRI).
    21. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, 04.
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