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Ability Bias and the Rising Education Premium in the United States: A Cohort-Based Analysis

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  • Baris Kaymak

Abstract

I use differences in educational attainment by birth cohorts to estimate the rise in the return to education in the United States. If average ability is similar among nearby cohorts, then differences in educational attainment lead to differences in earnings only if education is productive. The results reveal that (i) the return to a year of schooling increased from 4.8 percent to 8.4 percent between 1964 and 2003, (ii) the ability bias rose from 1.8 percent to 4.7 percent during the same period, and (iii) the acceleration in the education premium after 1980 is explained almost entirely by the rise in the ability bias. (c) 2009 by The University of Chicago. All rights reserved.

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  • Baris Kaymak, 2009. "Ability Bias and the Rising Education Premium in the United States: A Cohort-Based Analysis," Journal of Human Capital, University of Chicago Press, vol. 3(3), pages 224-267.
    • Handle: RePEc:ucp:jhucap:v:3:y:2009:i:3:p:224-267
    DOI: 10.1086/651167
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    2. Nikolov, Plamen & Jimi, Nusrat & Chang, Jerray, 2020. "The Importance of Cognitive Domains and the Returns to Schooling in South Africa: Evidence from Two Labor Surveys," Labour Economics, Elsevier, vol. 65(C).
    3. Daniel J. Henderson & Anne-Charlotte Souto & Le Wang, 2020. "Higher-Order Risk–Returns to Education," JRFM, MDPI, vol. 13(11), pages 1-25, October.
    4. Hendricks, Lutz & Schoellman, Todd, 2014. "Student abilities during the expansion of US education," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 19-36.
    5. McFarland, Michael J. & Wagner, Brandon G., 2015. "Does a college education reduce depressive symptoms in American young adults?," Social Science & Medicine, Elsevier, vol. 146(C), pages 75-84.
    6. Açıkgöz, Ömer Tuğrul & Kaymak, Barış, 2014. "The rising skill premium and deunionization," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 37-50.
    7. Liu, Vivian Y.T. & Belfield, Clive R. & Trimble, Madeline J., 2015. "The medium-term labor market returns to community college awards: Evidence from North Carolina," Economics of Education Review, Elsevier, vol. 44(C), pages 42-55.
    8. Toby J. Park & Stella M. Flores & Christopher J. Ryan, 2018. "Labor Market Returns for Graduates of Hispanic-Serving Institutions," Research in Higher Education, Springer;Association for Institutional Research, vol. 59(1), pages 29-53, February.

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