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Measurement Error Bias In Returns To Education: Evidence From A Developing Country - Sri Lanka

Author

Listed:
  • Rasika Ranasinghe

    (Department of Economics, Connecticut College)

  • Thomas Hertz

    (Department of Economics, American University)

Abstract

There is a continuing debate about the size and direction of the bias in estimates of returns to education. Evidence from developing countries is particularly scarce. This paper addresses the problem of measurement error bias in returns to schooling for Sri Lanka, by exploiting dual measurements of reported schooling for a sub-sample of the data and deriving a reliability estimate of schooling. This is used to obtain measurement error corrected fixed effects estimates of the proportionate increase associated with an additional level of schooling. This corrected measure is 5.5%, which is less than the OLS estimate of 7.8% for two person households.

Suggested Citation

  • Rasika Ranasinghe & Thomas Hertz, 2008. "Measurement Error Bias In Returns To Education: Evidence From A Developing Country - Sri Lanka," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 33(2), pages 107-124, December.
    • Handle: RePEc:jed:journl:v:33:y:2008:i:2:p:107-124
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    References listed on IDEAS

    as
    1. Thomas J. Kane & Cecilia Elena Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," NBER Working Papers 7235, National Bureau of Economic Research, Inc.
    2. Thomas J. Kane & Cecilia Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," Working Papers 798, Princeton University, Department of Economics, Industrial Relations Section..
    3. Behrman, Jere R. & Rosenzweig, Mark R., 1999. ""Ability" biases in schooling returns and twins: a test and new estimates," Economics of Education Review, Elsevier, vol. 18(2), pages 159-167, April.
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    Cited by:

    1. Taylor, Leon & Izbanova, Aigul & Kainazarova, Mansiya, 2015. "Indirect estimation of the rate of return to a university degree," MPRA Paper 68017, University Library of Munich, Germany.
    2. Shahe Emran & Forhad Shilpi, 2019. "Economic approach to intergenerational mobility: Measures, methods, and challenges in developing countries," WIDER Working Paper Series wp-2019-98, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Rate of Return; Economic Development; Educational Economics; Human Capital;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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