NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Separating Uncertainty from Heterogeneity in Life Cycle Earnings

Flavio Cunha, James J. Heckman, Salvador Navarro

NBER Working Paper No. 11024
Issued in January 2005
NBER Program(s):   EFG   ED   LS   CH

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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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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