Research fields
  •  
Visa Ämnen

Separating uncertainty from heterogeneity in life cycle earnings

Abstract of Working paper 2005:6

This paper develops and applies a method for decomposing cross section variability of
earnings into components that are forecastable at the time students decide to go to college
(heterogeneity) and components that are unforecastable. About 60% of variability in returns
to schooling is forecastable. This has important implications for using measured variability
to price risk and predict college attendance.
JEL Codes: C33, D84, I21

This paper develops and applies a method for decomposing cross section variability of earnings into components that are forecastable at the time students decide to go to college (heterogeneity) and components that are unforecastable. About 60% of variability in returns to schooling is forecastable. This has important implications for using measured variability to price risk and predict college attendance.

JEL Codes: C33, D84, I21


Published by:

Ifau

Changed:

9/21/2010