TY  - JOUR
AU  - Heckman,James J.
AU  - Lochner,Lance J.
AU  - Todd,Petra E.
TI  - Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11544
PY  - 2005
Y2  - August 2005
UR  - http://www.nber.org/papers/w11544
L1  - http://www.nber.org/papers/w11544.pdf
N1  - Author contact info:
James J. Heckman
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Tel: 773/702-0634
Fax: 773/702-8490
E-Mail: jjh@uchicago.edu

Lance Lochner
Department of Economics, Faculty of Social Science
University of Western Ontario
1151 Richmond Street, North
London, ON  N6A 5C2
CANADA
Tel: 519/661-2111 ext. 85281
Fax: 519/661-3666
E-Mail: llochner@uwo.ca

Petra E. Todd
Department of Economics
University of Pennsylvania
3718 Locust Walk
Philadelphia, PA  19104
Tel: 215/898-4084
Fax: 215/573-2057
E-Mail: ptodd@econ.upenn.edu
M2  - featured in NBER digest on 2005-08-08
AB  - This paper considers the interpretation of "Mincer rates of return." We test and reject the Mincer model. It fails to track the time series of true returns. We show how repeated cross section and panel data improves the ability of analysts to estimate the ex ante and ex post marginal rate of returns. Accounting for sequential revelation of information calls into question the validity of the internal rate of return as a tool for policy analysis. The large estimated psychic costs of schooling found in recent work helps to explain why persons do not attend school even though the financial rewards for doing so are high. We present methods for computing distributions of ex post and ex ante returns.
ER  -