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Individual Heterogeneity In The Returns To Schooling: Instrumental Variables Quantile Regression Using Twins Data, Omar Arias, Kevin F. Hallock, Walter Sosa-Escudero

Kevin F Hallock

Considerable effort has been exercised in estimating mean returns to education while carefully considering biases arising from unmeasured ability and measurement error. Recent work has investigated whether there are variations from the “mean” return to education across the population with mixed results. We use an instrumental variables estimator for quantile regression on a sample of twins to estimate an entire family of returns to education at different quantiles of the conditional distribution of wages while addressing simultaneity and measurement error biases. We test whether there is individual heterogeneity in returns to education and find that: more able individuals obtain more …