Abstract
Is the wage gap between majors in human arts and other fields caused by their education per se? If the educational choice is endogenous, the gap may instead be caused by selection. We document that individuals’ educational choice is correlated with that of older students, and argue that it should not influence wages directly.
Exploiting this "cohort dependence" as an instrument for educational choice, our 2SLS estimates show that the hourly wage gap is attributable to selection. However, only half of the gap in annual earnings is explained by selection, whereas the other half is due to lower work hours.
Exploiting this "cohort dependence" as an instrument for educational choice, our 2SLS estimates show that the hourly wage gap is attributable to selection. However, only half of the gap in annual earnings is explained by selection, whereas the other half is due to lower work hours.
| Original language | English |
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| Place of Publication | Frederiksberg |
| Publisher | Centre for Economic and Business Research, Copenhagen Business School |
| Number of pages | 43 |
| Publication status | Published - 2012 |
| Series | CEBR Discussion Paper |
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Keywords
- Returns to education
- Human Arts
- Instrumental Variables