Identifying the Role of Cognitive Ability in Explaining the Level of and Change in the Return to Schooling
45 Pages Posted: 3 Aug 2000 Last revised: 2 Apr 2001
Date Written: August 2000
This paper considers two problems that arise in determining the role of ability in explaining the level of and change in the rate of return to schooling. (1) Ability and schooling are so strongly dependent that it is not possible, over a wide range of variation in schooling and ability, to independently vary these two variables and estimate their separate impacts. (2) The structure of panel data makes it difficult to identify main age and time effects or to isolate crucial education-ability-time interactions needed to assess the role of ability in explaining the rise in the return to education.
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