A Human Capital Model of the Effects of Ability and Family Background on Optimal Schooling Levels

Tracy Regan, Ronald Oaxaca and Galen Burghardt ()
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Galen Burghardt: Calyon Financial, 550 West Jackson Boulevard, Suite 500, Chicago, IL 60661

No 2010-8, Working Papers from University of Miami, Department of Economics

Abstract: This paper develops a theoretical model of optimal schooling levels where ability and family background are the central explanatory variables. We derive schooling demand and supply functions based on individual wealth maximization. Using the National Longitudinal Survey of Youth 1979 data, we stratify our sample into 1-yr full-time equivalent (FTE) work experience cohorts for 1985–1989. The estimated Mincerian ‘‘overtaking’’ cohort (the years of work experience at which individuals’ observed earnings approximately equal what they would have been based on schooling and ability alone) corresponds to 13 FTE years of experience, yielding on average a rate of return of 10.3% and an average (optimal) 11.4 yr of schooling.

JEL-codes: J22 J24 J31 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2007-05-04
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: A HUMAN CAPITAL MODEL OF THE EFFECTS OF ABILITY AND FAMILY BACKGROUND ON OPTIMAL SCHOOLING LEVELS (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:mia:wpaper:2010-8

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