Abstract

This paper employs conditional second moments to identify the impact of education in wage regressions where education is treated as endogenous. This approach avoids the use of instrumental variables in a setting where instruments are frequently not available. We employ this methodology to estimate the returns to schooling for a sample of Australian workers. We find that accounting for the endogeneity of education in this manner increases the estimated return to education from 6 percent to 10 percent.

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Additional Information

ISSN
1548-8004
Print ISSN
0022-166X
Pages
pp. 1047-1065
Launched on MUSE
2012-04-04
Open Access
No
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