Separating Uncertainty from Heterogeneity in Life Cycle Earnings
125 Pages Posted: 5 Jan 2005
There are 3 versions of this paper
Separating Uncertainty from Heterogeneity in Life Cycle Earnings
Separating Uncertainty from Heterogeneity in Life Cycle Earnings
Separating Uncertainty from Heterogeneity in Life Cycle Earnings
Date Written: December 2004
Abstract
This paper develops and applies a method for decomposing cross section variability of earnings into components that are forecastable at the time students decide to go to college (heterogeneity) and components that are unforecastable. About 60% of variability in returns to schooling is forecastable. This has important implications for using measured variability to price risk and predict college attendance.
Keywords: uncertainty, lifecycle earnings, schooling, heterogeneity, counterfactuals
JEL Classification: C33, D84, I21
Suggested Citation: Suggested Citation
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