LABOR ECONOMICS
8th Edition
ISBN: 9781260004724
Author: BORJAS
Publisher: RENT MCG
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Question
Chapter 6, Problem 6RQ
To determine
The ability bias in the estimation of the
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Can regression be used to estimate the effect of gender on an individual’s earnings?
Consider an earnings function. In addition to the usual explanatory variables of experience and schooling, one can include variables for reflecting all of the following factors except:
A) industry premiums.
B) family background.
C) occupational premiums.
D) regional premiums.
E) unobserved heterogeneity
Imagine that the wage-schooling locus is given by w(s)=s^(1/3). What will be the optimal level of education for an individual to take if next period’s earnings in any given time are worth 95% of current earnings for that individual?
Answer is s=20/57
I need step by step calculations
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