Do Returns to Schooling Differ by Race and Ethnicity?
44 Pages Posted: 14 Feb 2005
Date Written: February 2005
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: Suggested Citation