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.
Document Object Identifier (DOI): 10.3386/w11024
Published: Cunha, Flavio, James Heckman and Salvador Navarro. "Separating Uncertainty From Heterogeneity In Life Cycle Earnings," Oxford Economic Papers, 2005, v57(2,Apr), 191-261. citation courtesy of
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