Separating Uncertainty from Heterogeneity in Life Cycle Earnings

Posted: 29 Feb 2008

See all articles by Flavio Cunha

Flavio Cunha

University of Pennsylvania - Department of Economics

Salvador Navarro

University of Western Ontario - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: April 2005

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.

JEL Classification: C33; D84; I21

Suggested Citation

Cunha, Flavio and Navarro, Salvador, Separating Uncertainty from Heterogeneity in Life Cycle Earnings (April 2005). Oxford Economic Papers, Vol. 57, Issue 2, pp. 191-261, 2005. Available at SSRN: https://ssrn.com/abstract=916832

Flavio Cunha (Contact Author)

University of Pennsylvania - Department of Economics ( email )

3718 Locust Walk
Room 527
Philadelphia, PA 19104
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215-898-5652 (Phone)

Salvador Navarro

University of Western Ontario - Department of Economics ( email )

Department of Economics
Social Science Centre
London, Ontario N6A 5B8
Canada
519-661-2111 ext 81586 (Phone)
519-661-3666 (Fax)

HOME PAGE: http://sites.google.com/site/econsalvador

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