A Structural Analysis of the Correlated Random Coefficient Wage Regression Model

Christian Belzil and Jorgen Hansen

Post-Print from HAL

Abstract: We estimate a finite mixture dynamic programming model of schooling decisions in which the log wage regression function is set in a random coefficient framework. We also analyze the determinants of 3 counterfactual experiments (a college attendance subsidy, a high school graduation subsidy and an overall decrease in the rate of time preference) and examine a proposition often claimed in the "Average Treatment Effects" literature; that the discrepancy between OLS and IV estimates of the returns to schooling may be explained by the relatively higher returns experienced by those affected by exogenous policy changes. We find that the average return to experience upon entering the labor market (0.0863) exceeds the average return to schooling (0.0576) and we find more cross-sectional variability in the returns to experience than in the returns to schooling. Labor market skills (as opposed to taste for schooling) appear to be the prime factor explaining schooling attainments. We find little evidence in favor of a positive correlation between reactions induced by an exogenous experiment and the individual specific returns to schooling.

Keywords: Random Coefficient; Returns to Schooling; Comparative Advantages; Dynamic Programming; Dynamic Self-Selection (search for similar items in EconPapers)
Date: 2007
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00201350v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Published in Econometrics, 2007, 140 (2), pp. 827-848

Downloads: (external link)
https://shs.hal.science/halshs-00201350v1/document (application/pdf)

Related works:
Journal Article: A structural analysis of the correlated random coefficient wage regression model (2007)
Working Paper: Structural analysis of the correlated radom coefficient wage regression model (2006)
Working Paper: A Structural Analysis of the Correlated Random Coefficient Wage Regression Model (2004)
Working Paper: A Structural Analysis of the Correlated Random Coefficient Wage Regression Model (2002)
Working Paper: A Structure Analysis of the Correlated Random Coefficient Wage Regression Model (2002)
Working Paper: A Structural Analysis of the Correlated Random Coefficient Wage Regression Model (2002)
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: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00201350

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().