Separating uncertainty from heterogeneity in life cycle earnings
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- 10 December 2004
- journal article
- Published by Oxford University Press (OUP) in Oxford Economic Papers
- Vol. 57 (2) , 191-261
- https://doi.org/10.1093/oep/gpi019
Abstract
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.Keywords
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