Separating Uncertainty from Heterogeneity in Life Cycle Earnings

This paper develops and applies a method for decomposing cross section variability of earnings into components that are forecastable at the time students decide to go to college (heterogeneity) and components that are unforecastable. About 60% of variability in returns to schooling is forecastable. This has important implications for using measured variability to price risk and predict college attendance.

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Year of publication:	2004
Authors:	Cunha, Flavio ; Heckman, James Joseph ; Navarro, Salvador
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	Lebenseinkommen \| Lebenszyklus \| Bildungsverhalten \| Bildungsertrag \| Schätzung \| Vereinigte Staaten \| uncertainty \| lifecycle earnings \| schooling \| heterogeneity \| counterfactuals

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Series:	IZA Discussion Papers ; 1437
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	477718701 [GVK] hdl:10419/20736 [Handle]
Classification:	I21 - Analysis of Education ; C33 - Models with Panel Data ; D84 - Expectations; Speculations
Source:	EconStor

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