Reporting errors, ability heterogeneity, and returns to schooling in China |
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| Authors: | Haizheng Li Yi Luo |
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| Affiliation: | Georgia Institute of Technology, Atlanta, GA; Georgia Institute of Technology, Atlanta, GA |
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| Abstract: | Abstract. This study is aimed at providing a more accurate estimate of the returns to schooling in China by controlling for unobserved ability heterogeneity and measurement errors. We identify a unique instrument to correct for the omitted ability bias. We find that the attenuation bias caused by measurement error dominates the omitted ability bias in the OLS estimation. Based on the GMM estimation, for young workers in China, the return to schooling is 15.0% overall and 16.9% for women. |
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