The effect of education and ability. An estimation on the labour income of Italian graduates

Name: The effect of education and ability. An estimation on the labour income of Italian graduates
Brand: Vita e Pensiero
Availability: OnlineOnly

digital

Article

Magazine

STATISTICA & APPLICAZIONI

Section

Open Access

Title

The effect of education and ability. An estimation on the labour income of Italian graduates

Authors

Antonino Di Pino, Patrizia Pulejo

Publisher

Vita e Pensiero

Format

Article |

Pdf

Pages

Online from

03-2011

Issn

1824-6672 (print) | 2283-6659 (digital)

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In this paper we present a method for estimating the effect of college education independent of individual ability. We use a matching procedure to compare graduates and high school diploma holders (the latter to be used as counterfactuals) in order to identify both treatment and ability parameters in a two-regime equation model. A sensitivity analysis suggests that our matching results are robust with respect to a possible bias due to unobserved heterogeneity. Using Istat’s Survey on Italian Graduates, we estimate that the average effect of one year of college attendance on labour income is close to 7.5%. Unlike the results reported in recent literature, the effect of education is not higher for better endowed individuals.

Keywords: Ability Bias, Matching, Treatment Effects Estimation, Two-Regime Regression Model.

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