Income, schooling, and ability: Evidence from a new sample of identical twins

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Abstract

We develop a model of optimal schooling investments and estimate it using new data on approximately 700 identical twins. We estimate an average return to schooling of 9 percent for identical twins, but estimated returns appear to be slightly higher for less able individuals. Simple cross-section estimates are marginally upward biased. These empirical results imply that abler individuals attain more schooling because they face lower marginal costs of schooling, not because of higher marginal benefits.

Original languageEnglish (US)
Pages (from-to)252-284
Number of pages33
JournalQuarterly Journal of Economics
Volume113
Issue number1
DOIs
StatePublished - Feb 1998

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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