A Monte Carlo Study of Migration and Child Educational Production : Aggregated vs. Disaggregated Resource Modeling

This paper studies the sensitivity of estimates on various assumptions about aggregation in modeling the school's effect in child educational production. Building a structural model to control the endogeneity of school qualities in the production function, the authors uses Monte Carlo simulations to evaluate the performance of a "correct" aggregation educational production model versus simple aggregation educational production model in estimating school resources' effect on academic outcome. Comparion of both specifications to the benchmark model without aggregation shows that the simple aggregation of school resources over a geographic area causes serious specification errors, and thus generate biased estimates for the marginal contribution of the school resources to test scores. Fortunately, such biasedness can be minimized by using the "correct" aggregation specification