Volume 35, Number 1 (Winter) 2000
Ermisch, John, and Marco Francesconi. 2000. "Educational Choice, Families and Young People's Earnings." Journal of Human Resources 35(1):143-176.
This paper presents two optimizing models of educational choice, discusses issues of identification, estimates earnings equations in the context of these models, and presents conditions under which we can test one against the other. The estimates indicate that education is endogenous for young people‘s earnings, creating a down ward bias in estimated returns from education that assume exogeneity Identification and estimation relies on family background information from a special sample from the British Household Panel Study 1991-95, which matches mothers and their young adult children. Our estimates favor a family model over an individual model, and they suggest that parents allocate resources to education to compensate for differences in their children‘s earnings endowments.
The authors are members of the Institute of Social and Economic Research, University of Essex. They are grateful to seminar participants at the London School of Economics and the Universities of Bristol, Dundee, Essex, Glasgow, St. Andrews, and Stirling, and especially to two anonymous referees for helpful comment on earlier versions of this paper. They also wish to thank the Economic and Social Research Council and the Leverhulme Trust for financial support for this research. The data used in this article can be obtained from April 2000 through March 2003 from Marco Francesconi, University of Essex, Wivenhoe Park, Colchester CO4 35Q, but those wishing to obtain the data must first obtain the required permission from the Data Archive at the University of Essex.
© 2002 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X