Separating Uncertainty from Heterogeneity in Life Cycle Earnings

Flavio Cunha, James J. Heckman and Salvador Navarro

No 1437, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: This paper develops and applies a method for decomposing cross section variability of earnings into components that are forecastable at the time students decide to go to college (heterogeneity) and components that are unforecastable. About 60% of variability in returns to schooling is forecastable. This has important implications for using measured variability to price risk and predict college attendance.

Keywords: uncertainty; lifecycle earnings; schooling; heterogeneity; counterfactuals (search for similar items in EconPapers)
JEL-codes: C33 D84 I21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ltv
Date: 2004-12
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Related works:
Working Paper: Separating Uncertainty from Heterogeneity in Life Cycle Earnings (2005)
Working Paper: Separating uncertainty from heterogeneity in life cycle earnings (2004)
Journal Article: Separating uncertainty from heterogeneity in life cycle earnings (2005)
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