Heterogeneous Returns to Education in Italy
| RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2020 - 1. An Issue in Honour of Carlo Dell’Aringa | Open Access
The estimation of the return from an additional education unit is subject to the ‘‘ability bias’’, responsible for the ‘‘endogeneity’’ of education to wages, and the ‘‘return bias’’, induced by self-selection into education levels based on individual-specific unobservable gains. We use a control functions estimator that, differently to standard instrumental variables, can account for both selection mechanisms. It adds two corrections terms to the wage equation, one for each selectivity source...