Using Heteroscedasticity to Estimate the Returns to Education / Vincent Hogan, Roberto Rigobon.

Format:

Book

Author/Creator:

Hogan, Vincent.

Contributor:

National Bureau of Economic Research.

Rigobon, Roberto.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9145.

NBER working paper series no. w9145

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

We apply a new estimator to the measurement of the economic returns to education. We control for endogenous education, unobserved ability and measurement error using only the natural heteroscedasticty of wages and education attainment. Our prefered estimate, 6.07%, is closer to the OLS estimate but smaller (and more precise) than the estimates typically reported by studies that use IV. Our results indicate that the biases generated by unobserved ability and measurement error tend to cancel each other out as suggested by Griliches (1977). We also present Monte Carlo evidence to show that the finite sample bias our estimator is small.

Notes:

Print version record

September 2002.