Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192468 
Year of Publication: 
2006
Series/Report no.: 
Discussion Papers No. 486
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
In this paper we develop a full information maximum likelihood method for the estimation of a joint model for the choice of length of schooling and the corresponding earnings equation. The model for schooling is assumed to be an ordered probit model, whereas the earnings equation is allowed to be very general with explanatory variables that are flexible transformations of schooling and experience. The coefficients associated with length of schooling and experience are allowed to be random and all the random terms of the model may be correlated. Under normality assumptions, we show that the joint probability distribution for schooling and earnings can be expressed on a closed form that is tractable for empirical analysis.
Subjects: 
Schooling choice
earnings equation
treatment effects
self-selection
ordered probit
random coefficients
full information maximum likelihood
JEL: 
C31
I20
J30
Document Type: 
Working Paper

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