Dispersion in the economic return to schooling

Colm Harmon, Vincent Hogan () and Ian Walker ()

No 200116, Working Papers from School of Economics, University College Dublin

Abstract: In this paper we extend the standard human capital earnings function to include dispersion in the rate of return to schooling by treating the return as a random coefficient. One motivation is that if the increase in supply of skilled workers has been brought about by dipping further into the ability distribution. Alternatively if the expansion in post-compulsory education comes about through relaxed credit constraints then we might expect this to increase average ability in the pool of educated workers. Either event might lead to a rise in the variance in returns. Based on a sample of data from the United Kingdom our estimates suggest that neither the mean nor the dispersion in returns to schooling has altered significantly over time. This is consistent with educational expansion not leading to a disproportionate inflow of low ability individuals into the system.

Keywords: Education--Economic aspects; Wages--Effect of education on; Labor supply--Effect of education on (search for similar items in EconPapers)
JEL-codes: C31 J24 J31 (search for similar items in EconPapers)
Date: 2001-08
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Citations: View citations in EconPapers (10)

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http://hdl.handle.net/10197/929 First version, 2001 (application/pdf)

Related works:
Journal Article: Dispersion in the economic return to schooling (2003)
Working Paper: Dispersion in the economic return to schooling (2002)
Working Paper: Dispersion in the Economic Return to Schooling (2001)
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