Further Estimates of the Economic Return to Schooling from a New Sample of Twins

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Abstract
In a recent, and widely cited, paper, Ashenfelter and Krueger (1994) use a new sample of identical twins to investigate the contribution of genetic ability to the observed cross-sectional return to schooling. This paper re-examines Ashenfelter and Krueger's estimates using three additional years of the same twins survey. I find that the return to schooling among identical twins is about 10 percent per year of schooling completed. Most importantly, unlike the results reported in Ashenfelter and Krueger, I find that the within- twin regression estimate of the effect of schooling on the log wage is smaller than the cross-sectional estimate, implying a small upward bias in the cross-sectional estimate. Ashenfelter and Krueger's measurement error corrected estimates are insignificantly different from those presented here, however. Finally, there is evidence of an important individual-specific component to the measurement error in schooling reports.
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