Zvi Griliches' Contribution to the Theory of Human Capital

45 Pages Posted: 14 Nov 2003 Last revised: 20 Jul 2022

See all articles by Reuben Gronau

Reuben Gronau

Hebrew University of Jerusalem - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: November 2003

Abstract

The paper discusses Zvi Griliches' contribution to the estimation of the earning function. The topic was the central theme of Griliches' research agenda during the 70s. Griliches played a major role in the ability- schooling controversy of the time. He was instrumental in repelling the attack of the revisionists' on the Theory of Human Capital, and the claim that the schooling effect in the earning function is merely an artifact of the true ability' and family background' effects. Griliches lacked at the time the proper data to prove unequivocally that the ability bias plays only a minor role in the estimation of the rate of return to schooling. He was, however, able to show that the seemingly foolproof evidence of his opponents suffers from serious biases due to the endogeneity and the measurement errors in the schooling variable. His assertion that the standard OLS estimator is biased downward, rather than upward, has been shown true by future research.

Suggested Citation

Gronau, Reuben, Zvi Griliches' Contribution to the Theory of Human Capital (November 2003). NBER Working Paper No. w10081, Available at SSRN: https://ssrn.com/abstract=467549

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