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Source: IVIE Working Paper-AD
Resulting in 1 citation.
1. Vella, Francis
Farré, Lídia
Klein, Roger
A Parametric Control Function Approach to Estimating the Returns to Schooling in the Absence of Exclusion Restrictions: An Application to the NLSY
IVIE Working Paper-AD 2008-16, Instituto Valenciano de Investigaciones Económicas, 2008
Cohort(s): NLSY79
Publisher: Instituto Valenciano de Investigaciones Económicas (IVIE)
Keyword(s): Educational Returns; Endogeneity; Schooling; Variables, Instrumental

Permission to reprint the abstract has not been received from the publisher.

We estimate the return to education using a sample drawn from the National Longitudinal Survey of Youth 1979 (NLSY79). Rather than accounting for the endogeneity of schooling through the use of instrumental variables we employ a parametric version of the Klein and Vella (2006a) estimator. This estimator bypasses the need for instruments by exploiting features of the conditional second moments of the errors. As the Klein and Vella (2006a) procedure is semi-parametric it is computationally demanding. We illustrate how to greatly reduce the required computation by parameterizing the second moments. Accounting for endogeneity increases the estimate of the return to education by 5 percentage points, from 7.6% to 12.7%.
Bibliography Citation
Vella, Francis, Lídia Farré and Roger Klein. "A Parametric Control Function Approach to Estimating the Returns to Schooling in the Absence of Exclusion Restrictions: An Application to the NLSY." IVIE Working Paper-AD 2008-16, Instituto Valenciano de Investigaciones Económicas, 2008.