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Author: Ormiston, Michael B.
Resulting in 1 citation.
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Low, Stuart A. Ormiston, Michael B. |
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Stochastic Earnings Functions, Risk, and the Rate of Return to Schooling Southern Economic Journal 57,4 (April 1991): 1124-1132. Also: http://www.jstor.org/stable/1060339 Cohort(s): NLSY79 Publisher: Southern Economic Association Keyword(s): Earnings; Educational Returns; Gender Differences; Schooling A simple Mincer-type model is used to investigate the relation between human capital investment and the riskiness of the wage distribution and to determine the rate of return to education when risk considerations are taken into account. Data are taken from the National Longitudinal Surveys Young Male and Female cohorts for 1981. The analysis shows that general human capital is risk increasing while specific human capital is risk reducing. It also shows that both risk and risk aversion are significant factors working to reduce the rate of return to schooling. For males, the generalized stochastic earnings function yields estimates of the rate of return to schooling that are 6.5% (risk neutral) to 89% (strongly risk averse) lower than those obtained using the standard, Mincer-type earnings function. For females, the results are equally dramatic, with the generalized estimates yielding estimates that are 4.5% to 90% lower than the standard earnings function. [ABI/INFORM] |
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Bibliography Citation
Low, Stuart A. and Michael B. Ormiston. "Stochastic Earnings Functions, Risk, and the Rate of Return to Schooling." Southern Economic Journal 57,4 (April 1991): 1124-1132.
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