Double Trouble: On the Value of Twins-Based Estimation of the Return to Schooling

34 Pages Posted: 14 Jul 2000

See all articles by John Bound

John Bound

University of Michigan; National Bureau of Economic Research (NBER)

Gary Solon

University of Arizona; National Bureau of Economic Research (NBER)

Date Written: September 1998

Abstract

Several recent studies use the schooling and wage variation between monozygotic twins to estimate the return to schooling. In this paper, we summarize the results from this literature, and we examine the implications of endogenous determination of which twin goes to school longer and of measuring schooling with (possibly mean-reverting) error. Endogeneity of between-twins schooling variation is strongly suggested by the extensive (mostly non-economic) literature documenting that the between-twins difference in birth weight is correlated with the between-twins differences in both schooling and IQ. We conclude that twins-based estimation is vulnerable to the same sort of inconsistency that afflicts conventional cross-sectional estimation. We argue, however, that, if one starts with the presumption that endogenous schooling induces upward inconsistency in the estimated return to schooling, the new twins-based estimates may complement other approaches to tightening the upper bound on the return to schooling.

Suggested Citation

Bound, John and Solon, Gary, Double Trouble: On the Value of Twins-Based Estimation of the Return to Schooling (September 1998). NBER Working Paper No. w6721. Available at SSRN: https://ssrn.com/abstract=226374

John Bound (Contact Author)

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
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National Bureau of Economic Research (NBER)

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Gary Solon

University of Arizona ( email )

Department of Economics
Eller College of Management
Tucson, AZ 85719
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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