Earnings of Swedish Young Men
(English)Manuscript (preprint) (Other academic)
Griliches’ (1976) study on the wage premium for formal schooling in America is replicated on the Swedish Malmö Longitudinal Study, an individual data base with unusually good ability measures collected at young age. The model is tried for two years, when the men were 25 and 30 years old, respectively. The wage premium is shown to be slightly less in the Swedish material. While Griliches found the ability bias to be between ten and twenty per cent, it is found to vary a lot between the alternative ability variables and between the two years tested in the Swedish material. Grade point average as an ability variable gives a large bias, approximately thirty percent in both years, while IQ from the age of twenty gives the highest bias, thirty-five percent. The schooling coefficient increases in a few cases when other background variables are used as proxies for, or together with, ability. Ability by way of intelligence quotas is not statistically significant before the men are thirty years old. A 2SLS is used towards the end to correct for the potential endogeneity of the schooling variable. A Hausman test does not reject the equality between the 2SLS estimator and the OLS estimator in either case.
Returns to education, ability bias
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-24953OAI: oai:DiVA.org:kth-24953DiVA: diva2:354587
QC 201010012010-10-042010-10-042010-10-04Bibliographically approved