The Wage Return to Education: What Hides Behind the Least Squares Bias?

9 Pages Posted: 21 Feb 2015

See all articles by Corrado Andini

Corrado Andini

IZA Institute of Labor Economics

Abstract

This paper combines the approach by GuimarĂ£es and Portugal (2010) with the methodology of Gelbach (2015) to investigate the determinants of the least squares bias of the wage return to education. We find that disregarding individual fixed effects is highly problematic, accounting for 95% of the bias. In contrast, disregarding firm fixed effects has marginal consequences.

Keywords: wages, education, least squares

JEL Classification: I21, J31

Suggested Citation

Andini, Corrado, The Wage Return to Education: What Hides Behind the Least Squares Bias?. IZA Discussion Paper No. 8855, Available at SSRN: https://ssrn.com/abstract=2568071

Corrado Andini (Contact Author)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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