Earnings Functions and Rates of Return

James J. Heckman, Lance Lochner () and Petra E. Todd ()
Additional contact information
Petra E. Todd: University of Pennsylvania

No 3310, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: The internal rate of return to schooling is a fundamental economic parameter that is often used to assess whether expenditure on education should be increased or decreased. This paper considers alternative approaches to estimating marginal internal rates of return for different schooling levels. We implement a general nonparametric approach to estimate marginal internal rates of return that take into account tuition costs, income taxes and nonlinearities in the earnings-schooling-experience relationship. The returns obtained by the more general method differ substantially from Mincer returns in levels and in their evolution over time. They indicate relatively larger returns to graduating from high school than from graduating from college, although both have been increasing over time.

Keywords: schooling; marginal internal rate of return; nonparametric estimation (search for similar items in EconPapers)
JEL-codes: C31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu and nep-ltv
Date: 2008-01
View list of references View citations in EconPapers

Downloads: (external link)
http://ftp.iza.org/dp3310.pdf (application/pdf)

Related works:
Working Paper: EARNINGS FUNCTIONS AND RATES OF RETURN (2008)
Working Paper: Earnings Functions and Rates of Return (2008)
Working Paper: Earnings Functions and Rates of Return (2008)
Journal Article: Earnings Functions and Rates of Return (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:iza:izadps:dp3310

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute for the Study of Labor (IZA)
Address: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Contact information at EDIRC.
Series data maintained by Mark Fallak ().