Estimating returns to schooling: when does the career begin?
Economics of Education Review Volume 17, Number 1 ISSN 0272-7757 Publisher: Elsevier Ltd
Because the life cycle is not neatly divided into a period of full-time schooling followed by a period of full-time employment, it is unclear where analysts should “start the clock” on the career for purposes of estimating the returns to schooling. This study uses data from the National Longitudinal Survey of Youth to determine how estimated returns to schooling are influenced by the choice of career starting date. Schooling and experience measures are defined for four alternative starting dates and then used to estimate a standard wage model for samples of white and non-white men. Estimated returns to schooling increase dramatically as an increasingly later starting date is used because increasingly large amounts of unmeasured, “pre-career” work experience bias the schooling effects. A specification that controls more accurately for the accumulation of schooling and work experience is suggested as an alternative to the orthodox model. [JEL I2, J3]
Light, A. Estimating returns to schooling: when does the career begin?. Economics of Education Review, 17(1), 31-45. Elsevier Ltd.