Ability bias, skewness and the college wage premium
Naylor, Robin Andrew, 1959- and Smith, Jeremy (Jeremy P.) (2009) Ability bias, skewness and the college wage premium. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers).
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Changes in educational participation rates across cohorts are likely to imply changes in the ability-education relationship and thereby to impact on estimated returns to education. We show that skewness in the underlying ability distribution is a key determinant of the impact of graduate expansion on the college wage premium. Calibrating the model against the increased proportion of university students in Britain, we find that changes in the average ability gap between university students and others are likely to have mitigated demand-side forces.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HD Industries. Land use. Labor|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Wages -- Effect of education on, Wages -- College graduates, Cohort analysis|
|Series Name:||Warwick economic research papers|
|Publisher:||University of Warwick, Department of Economics|
|Place of Publication:||Coventry|
|Number of Pages:||13|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|References:||Becker, G.S., 1975, Human Capital, 2nd Edition, New York: National Bureau of Economic Research. Blackburn, M. L. and Neumark, D., 1991, Omitted-ability bias and the increase in the return to schooling, NBER Working Paper 3693. Blackburn, M. L. and Neumark, D., 1993, Omitted-ability bias and the increase in the return to schooling, Journal of Labor Economics, 11, 521- 544. Bratti, M., Naylor, R.A. and Smith, J.P., 2008, Heterogeneities in the returns to degrees: evidence from the British Cohort Study 1970, mimeo, University of Warwick. Cawley, J., Heckman, J., Lochner, L. and Vytlacil, E., 2000, Understanding the role of cognitive ability in accounting for the recent rise in the economic return to education, in Arrow, K., Bowles, S. and Durlauf, S. (eds), Meritocracy and Economic Inequality, Princeton University Press, New Jersey. DfES, 2003, Widening participation in higher education. London: Department for Education and Skills. Taber, C.R., 2001, The rising college premium in the eighties: return to college or return to unobserved ability? Review of Economic Studies, 68, 665-691. Walker, I. and Zhu, Y., 2008, The college wage premium, overeducation, and the expansion of higher education in the UK, Scandinavian Journal of Economics, 110, 695-710.|
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