Life-cycle bias and the returns to schooling in current and lifetime earnings

Arbeitspapier

This paper uses a unique data set with nearly career-long earnings histories to provide evidence on the returns to schooling in current and lifetime earnings. We use these results to assess the importance of life-cycle bias in earnings regressions using current earnings as a proxy for lifetime earnings. To account for the endogeneity of schooling, we apply three commonly used identification strategies. Our estimates demonstrate a strong life-cycle bias, often exceeding the bias from assuming that schooling is exogenous. We further explore the problems caused by life-cycle bias in research on the economic returns to schooling, and discuss possible remedies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 666

Classification and Topics

• Classification: Wirtschaft ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Wage Level and Structure; Wage Differentials
• Subject: Returns to schooling ; life-cycle bias ; lifetime earnings ; current earnings ; errors-in-variables model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bhuller, Manudeep ; Mogstad, Magne ; Salvanes, Kjell G.
• Event: Veröffentlichung
• (who): Statistics Norway, Research Department
• (where): Oslo
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/192648
• Last update: 10.03.2025, 11:42 AM CET