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Title:Measurement Error in Education and Growth Regressions PDF Logo
Authors:Alessie, Rob J. M.
Portela, Miguel
Teulings, Coen N.
Issue Date:2004
Series/Report no.:IZA Discussion paper series 1165
Abstract:The perpetual inventory method used for the construction of education data per country leads to systematic measurement error. This paper analyses the effect of this measurement error on GDP regressions. There is a systematic difference in the education level between census data and observations constructed from enrolment data. We discuss a methodology for correcting the measurement error. The standard attenuation bias suggests that using these corrected data would lead to a higher coefficient. Our regressions reveal the opposite. We discuss why the measurement error yields an overestimation. Our analysis contributes to an explanation of the difference between regressions based on 5 and on 10 year firstdifferences.
Subjects:growth
education
measurement error
JEL:I2
O4
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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