The Wage Return to Education: What Hides Behind the Least Squares Bias?

Corrado Andini

No 8855, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper combines the approach by Guimarães and Portugal (2010) with the methodology of Gelbach (2015) to investigate the determinants of the least squares bias of the wage return to education. We find that disregarding individual fixed effects is highly problematic, accounting for 95% of the bias. In contrast, disregarding firm fixed effects has marginal consequences.

Keywords: least squares; education; wages (search for similar items in EconPapers)
JEL-codes: I21 J31 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2015-02
New Economics Papers: this item is included in nep-edu
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Published - revised version published in: International Journal of Manpower, 2024, 45 (7), 1409-1425

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