Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/21433 
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dc.contributor.authorBelzil, Christianen
dc.contributor.authorHansen, Jörgenen
dc.date.accessioned2009-01-28T16:22:22Z-
dc.date.available2009-01-28T16:22:22Z-
dc.date.issued2002-
dc.identifier.urihttp://hdl.handle.net/10419/21433-
dc.description.abstractWe estimate a structural dynamic programming model of schooling decisions withunobserved heterogeneity in school ability and market ability on a sample taken from the National Longitudinal Survey of Youth (NLSY). Both the instantaneous utility of attending school and the wage regression function are estimated flexibly. The null hypothesis that the local returns to schooling are constant is strongly rejected in favor of a convex wage regression function composed of 8 spline segments. The local returns are very low until grade 11 (1% per year or less), increase to 3.7% in grade 12 and exceed 10% only from grade 14 to grade 16. The average return increases smoothly from 0.4% (grade 7) to 4.6%(grade 16). The convexity of the log wage regression function implies that those who obtain more schooling also experience higher average returns. We strongly reject the null hypothesis that unobserved market ability is uncorrelated with realized schooling attainments, which underlies many previous studies that have used OLS to estimate the return to schooling. The correlation between realized schooling and market ability is found to be positive and is consistent with the existence of a positive ?Ability Bias?.en
dc.language.isoengen
dc.publisher|aInstitute for the Study of Labor (IZA) |cBonnen
dc.relation.ispartofseries|aIZA Discussion Papers |x508en
dc.subject.jelJ2en
dc.subject.jelJ3en
dc.subject.ddc330en
dc.subject.keywordreturn to schoolingen
dc.subject.keyworddynamic programmingen
dc.subject.keywordability biasen
dc.subject.keyworddiscount rate biasen
dc.subject.stwBildungsertragen
dc.subject.stwBildungsverhaltenen
dc.subject.stwDynamische Optimierungen
dc.subject.stwNutzenfunktionen
dc.subject.stwSchätzungen
dc.subject.stwHumankapitalen
dc.subject.stwTheorieen
dc.subject.stwVereinigte Staatenen
dc.titleUnobserved Ability and the Return to Schooling-
dc.typeWorking Paperen
dc.identifier.ppn845579231en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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