The Co-twin Methodology and Returns to Schooling – Testing a Critical Assumption

Örjan Sandewall (), David Cesarini () and Magnus Johannesson ()
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Örjan Sandewall: London School of Economics, http://www.ifn.se/web/Orjan_Sandewall.aspx

No 806, Working Paper Series from Research Institute of Industrial Economics

Abstract: Twins-based estimates of the return to schooling feature prominently in the labor economics literature. The validity of such estimates hinges critically on the assumption that within-pair variation in schooling is explained by factors which are unrelated to wage earning ability. This paper develops a framework for testing this assumption, and finds, using a unique dataset of monozygotic twins, strong evidence against it. Di¤erences in adolescent IQ test scores predict within-pair variation in educational attainment, and including IQ in the wage equation causes within-pair point estimates for the returns to schooling to decline significantly. Our results thus cast doubt on the validity of estimates derived from the co-twin literature.

Keywords: Returns to Schooling; Twins; Equal Ability Assumption (search for similar items in EconPapers)
JEL-codes: I21 J24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu, nep-hrm and nep-lab
Date: 2009-08-24

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Persistent link: http://EconPapers.repec.org/RePEc:hhs:iuiwop:0806

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