%0 Journal Article %1 hogan2003using %A Hogan, Vincent %A Rigobon, Roberto %D 2003 %J Unpublished manuscript %K bildungsrendite econometrics methoden ökonometrie %T Using unobserved supply shocks to estimate the returns to education %X We apply a new estimator to the measurement of the economic returns to education. We control for endogenous education, unobserved ability and mea- surement error using the natural heteroscedasticty of education attainment. We show that this heteroscedasticity arises naturally from unobserved differences in education supply and composition effects across regions. Our preferred esti- mate, 6.07%, is closer to the OLS estimate but smaller (and more precise) than the estimates typically reported by studies that use IV. Our results indicate that the biases generated by unobserved ability and measurement error tend to cancel each other out as suggested by Griliches (1977). We show that our estimator is robust to self-selection into education with heterogeneous returns. We also present Monte Carlo evidence to show that the finite sample bias of our estimator is small.

@article{hogan2003using, abstract = {We apply a new estimator to the measurement of the economic returns to education. We control for endogenous education, unobserved ability and mea- surement error using the natural heteroscedasticty of education attainment. We show that this heteroscedasticity arises naturally from unobserved differences in education supply and composition effects across regions. Our preferred esti- mate, 6.07%, is closer to the OLS estimate but smaller (and more precise) than the estimates typically reported by studies that use IV. Our results indicate that the biases generated by unobserved ability and measurement error tend to cancel each other out as suggested by Griliches (1977). We show that our estimator is robust to self-selection into education with heterogeneous returns. We also present Monte Carlo evidence to show that the finite sample bias of our estimator is small. }, added-at = {2012-12-02T12:42:45.000+0100}, author = {Hogan, Vincent and Rigobon, Roberto}, biburl = {https://www.bibsonomy.org/bibtex/299fd7749b08038251162cc2d4a43c186/hackstutz}, interhash = {b1f8b9dfbcdda207790da3e8a64d5f7c}, intrahash = {99fd7749b08038251162cc2d4a43c186}, journal = {Unpublished manuscript}, keywords = {bildungsrendite econometrics methoden ökonometrie}, timestamp = {2012-12-05T00:00:34.000+0100}, title = {Using unobserved supply shocks to estimate the returns to education}, year = 2003 }