Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/52041 
Year of Publication: 
2011
Series/Report no.: 
IZA Discussion Papers No. 5788
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper uses a unique data set with nearly career-long earnings histories to provide evidence on the returns to schooling in current and lifetime earnings. We use these results to assess the importance of life-cycle bias in earnings regressions using current earnings as a proxy for lifetime earnings. To account for the endogeneity of schooling, we apply three commonly used identification strategies. Our estimates demonstrate a strong life-cycle bias, often exceeding the bias from assuming that schooling is exogenous. We further explore the problems caused by life-cycle bias in research on the economic returns to schooling, and discuss possible remedies.
Subjects: 
returns to schooling
life-cycle bias
lifetime earnings
current earnings
errors-in-variables model
JEL: 
J24
J31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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