Do Returns to Schooling Differ by Race and Ethnicity?

44 Pages Posted: 14 Feb 2005

See all articles by Lisa Barrow

Lisa Barrow

Federal Reserve Bank of Chicago

Cecilia E. Rouse

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER)

Date Written: February 2005

Abstract

Using data from the U.S. Decennial Census and the National Longitudinal Surveys, we find little evidence of differences in the return to schooling across racial and ethnic groups, even with attempts to control for ability and measurement error biases. While our point estimates are relatively similar across racial and ethnic groups, our conclusion is driven in part by relatively large standard errors. That said, we find no evidence that returns to schooling are lower for African Americans or Hispanics than for non-minorities. As a result, policies that increase education among the lowskilled have a good possibility of increasing economic well-being and reducing inequality. More generally, our analysis suggests further research is needed to better understand the nature of measurement error and ability bias across subgroups in order to fully understand potential heterogeneity in the return to schooling across the population.

Keywords: returns to schooling, education, earnings, race, ethnicity

JEL Classification: J15, J24

Suggested Citation

Barrow, Lisa and Rouse, Cecilia E., Do Returns to Schooling Differ by Race and Ethnicity? (February 2005). FRB of Chicago Working Paper No. 2005-02. Available at SSRN: https://ssrn.com/abstract=666824 or http://dx.doi.org/10.2139/ssrn.666824

Lisa Barrow (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States
312-322-5073 (Phone)
312-322-2357 (Fax)

Cecilia E. Rouse

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
United States
609-258-4042 (Phone)
609-258-2907 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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