IDEAS home Printed from https://ideas.repec.org/p/pri/indrel/381.html
   My bibliography  Save this paper

Mobility and the Returns to Education: Testing A Roy Model With Multiple Markets

Author

Listed:
  • Gordon B. Dahl

    (Princeton University)

Abstract

This paper develops and applies a new semi-parametric correction for sample-selection in the context of a multi-market Roy model of mobility and earnings. Instead of workers choosing occupations as in Roy's paper, this paper formulates a model where individuals choose which of the 50 states in the U.S. (plus the District of Columbia) to live and work in. The new econometric methodology combines Lee's (1982) parametric "maximum order statistic" approach to multi-choice selection models with Ahn and Powell's (1993) more recent work on "single-index" models. The resulting correction requires no assumptions on the joint distribution of the error terms in the outcome and multiple selection equations and can easily be adapted to a variety of other polychotomous choice problems. The empirical work, which uses Census data for 1980 and 1990, confirms the role of comparative advantage in mobility decisions. The results suggest that self-selection of higher educated people to states with higher returns to education generally leads to downward biases in the returns to education in state-specific labor markets. I also find that state-to-state migration flows respond strongly to differences in the return to education and amenities across states.

Suggested Citation

  • Gordon B. Dahl, 1997. "Mobility and the Returns to Education: Testing A Roy Model With Multiple Markets," Working Papers 760, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:381
    as

    Download full text from publisher

    File URL: https://dataspace.princeton.edu/jspui/bitstream/88435/dsp01tt44pm85v/1/381.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Andrews, Donald W K, 1991. "Asymptotic Normality of Series Estimators for Nonparametric and Semiparametric Regression Models," Econometrica, Econometric Society, vol. 59(2), pages 307-345, March.
    2. Barry R. Chiswick, 1974. "Income Inequality: Regional Analyses within a Human Capital Framework," NBER Books, National Bureau of Economic Research, Inc, number chis74-1, October.
    3. Falaris, Evangelos M, 1987. "A Nested Logit Migration Model with Selectivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(2), pages 429-443, June.
    4. Dynarski, Mark, 1987. "The Scholastic Aptitude Test: Participation and performance," Economics of Education Review, Elsevier, vol. 6(3), pages 263-273, June.
    5. repec:cup:etheor:v:6:y:1990:i:4:p:466-79 is not listed on IDEAS
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
    7. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-1149, September.
    8. Borjas, George J. & Bronars, Stephen G. & Trejo, Stephen J., 1992. "Self-selection and internal migration in the United States," Journal of Urban Economics, Elsevier, vol. 32(2), pages 159-185, September.
    9. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
    10. David Card & A. Abigail Payne, 1997. "School Finance Reform, the Distribution of School Spending, and the Distribution of SAT Scores," Working Papers 766, Princeton University, Department of Economics, Industrial Relations Section..
    11. Gronau, Reuben, 1974. "Wage Comparisons-A Selectivity Bias," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1119-1143, Nov.-Dec..
    12. Arabmazar, Abbas & Schmidt, Peter, 1981. "Further evidence on the robustness of the Tobit estimator to heteroskedasticity," Journal of Econometrics, Elsevier, vol. 17(2), pages 253-258, November.
    13. Dolton, P J & Makepeace, G H & Van Der Klaauw, W, 1989. "Occupational Choice and Earnings Determination: The Role of Sample Selection and Non-pecuniary Factors," Oxford Economic Papers, Oxford University Press, vol. 41(3), pages 573-594, July.
    14. Andrews, Donald W.K. & Whang, Yoon-Jae, 1990. "Additive Interactive Regression Models: Circumvention of the Curse of Dimensionality," Econometric Theory, Cambridge University Press, vol. 6(04), pages 466-479, December.
    15. Card, David & Sullivan, Daniel G, 1988. "Measuring the Effect of Subsidized Training Programs on Movements in and out of Employment," Econometrica, Econometric Society, vol. 56(3), pages 497-530, May.
    16. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
    17. Ashenfelter, Orley & Card, David, 1985. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 648-660, November.
    18. Heckman, James J & Sedlacek, Guilherme L, 1990. "Self-selection and the Distribution of Hourly Wages," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 329-363, January.
    19. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    20. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-553, September.
    21. Reuben Gronau, 1973. "Wage Comparisons -A Selectivity Bias," NBER Working Papers 0013, National Bureau of Economic Research, Inc.
    22. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 605-654.
    23. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    24. Arabmazar, Abbas & Schmidt, Peter, 1982. "An Investigation of the Robustness of the Tobit Estimator to Non-Normality," Econometrica, Econometric Society, vol. 50(4), pages 1055-1063, July.
    25. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
    26. Heckman, James J, 1990. "Varieties of Selection Bias," American Economic Review, American Economic Association, vol. 80(2), pages 313-318, May.
    27. Ahn, Hyungtaik & Powell, James L., 1993. "Semiparametric estimation of censored selection models with a nonparametric selection mechanism," Journal of Econometrics, Elsevier, vol. 58(1-2), pages 3-29, July.
    28. Han, Aaron K., 1987. "Non-parametric analysis of a generalized regression model : The maximum rank correlation estimator," Journal of Econometrics, Elsevier, vol. 35(2-3), pages 303-316, July.
    29. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
    30. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
    31. Joshua D. Angrist, 1995. "Conditioning on the Probability of Selection to Control Selection Bias," NBER Technical Working Papers 0181, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Roy model; geographic mobility; return to education; selectivity bias;

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pri:indrel:381. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bobray Bordelon). General contact details of provider: http://edirc.repec.org/data/irprius.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.