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Title: Heterogeneity in Schooling Rates of Return

Citation Type: Miscellaneous

Publication Year: 2009

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Abstract: This paper relaxes the assumption of homogenous rates of return to schoolingby employing nonparametric kernel regression. This approach allows us toexamine the differences in rates of return of education both across and withingroups. Similar to previous studies we find that on average blacks have higherreturns to education than whites, natives have higher returns than immigrantsand younger workers have higher returns than older workers. Contrary to previousstudies we find that the average gap of the rate of return between white andblack workers is larger than previously thought and the gap is smaller betweenimmigrants and natives. We also uncover significant heterogeneity both acrossand within groups. The estimated densities of returns vary across groups andtime periods and is often skewed. Further examination of the densities showssignificant portions of the population possessing negative returns. The negativereturns are more common in older workers, individuals with young children andimmigrants.

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Authors: Wang, Le; Henderson, Daniel J.; Polachek, Solomon W.

Publisher: IZA

Data Collections: IPUMS USA

Topics: Education

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