Estimating the Return to Endogenous Schooling Decisions via Conditional Second Moments

• Autores: Roger Klein, Francis Vella
• Localización: Journal of human resources, ISSN 0022-166X, Vol. 44, Nº 4, 2009, págs. 1047-1065
• Idioma: inglés
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• Resumen

  • This paper employs conditional second moments to identify the impact of education in wage regressions where education is treated as endogenous. This approach avoids the use of instrumental variables in a setting where instruments are frequently not available. We employ this methodology to estimate the returns to schooling for a sample of Australian workers. We find that accounting for the endogeneity of education in this manner increases the estimated return to education from 6 percent to 10 percent.