Quality-Consistent Estimates of International Schooling and Skill Gradients

Eric A. Hanushek
Lei Zhang
Published Date
Summer 2009
Journal of Human Capital
pp. 107-143
School attainment has been the central focus of many policy discussions around the world since the influential work of Mincer (1970, 1974) identified schooling as the prime proxy for human capital and individual labor market skills. His innovative empirical approach to investigating earnings determination across individuals has fueled continuing investigations of national and international differences in the returns to schooling (e.g., Psacharopoulos 1994; Harmon, Oosterbeek, and Walker 2003; Psacharopoulos and Patrinos 2004). But a parallel literature has highlighted potential problems with estimation and interpretation of the standard Mincerian model, centering largely on whether the schooling coefficient in a cross-sectional earnings analysis should really be viewed as the rate of return to a year of school. We find, however, that even dealing with the issues in these critiques does not resolve some more fundamental problems.