Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/33173 
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers No. 1927
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper develops a theoretical model of optimal schooling levels where ability and family background are the central explanatory variables. We derive schooling demand and supply functions based on individual wealth maximization. Using NLSY79 data we stratify our sample into one-year FTE work experience cohorts for 1985-1989. Mincer's (1974) overtaking cohort (the years of work experience at which individuals' observed earnings approximately equal what they would have been based on schooling and ability alone) corresponds to 13 FTE years of work experience yielding on average a rate of return of 9.6 percent and an average (optimal) 11.4 years of schooling.
Subjects: 
human capital
ability
family background
schooling
earnings
JEL: 
J24
J31
J22
Document Type: 
Working Paper

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