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Citation Information

Type Journal Article - Economics of Education Review
Title Heterogeneity in schooling rates of return
Author(s)
Volume 30
Issue 6
Publication (Day/Month/Year) 2011
Page numbers 1202-1214
URL http://www.econstor.eu/bitstream/10419/51822/1/666547114.pdf
Abstract
This paper relaxes the assumption of homogeneous rates of return to schooling by employing
nonparametric kernel regression. This approach allows us to examine the differences in rates
of return to education both across and within groups. Similar to previous studies we find that
on average blacks have higher returns to education than whites, natives have higher returns
than immigrants and younger workers have higher returns than older workers. Contrary to
previous studies we find that the average gap of the rate of return between white and black
workers is larger than previously thought and the gap is smaller between immigrants and
natives. We also uncover significant heterogeneity, the extent of which differs both across
and within groups. The estimated densities of returns vary across groups and time periods
and are often skewed. For example, during the period 1950-1990, at least 5% of whites have
negative returns. Finally, we uncover the characteristics common amongst those with the
smallest and largest returns to education. For example, we find that immigrants, aged 50-59,
are most likely to have rates of return in the bottom 5% of the population.

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