TY  - JOUR
AU  - Heckman,James J.
AU  - Lochner,Lance J.
AU  - Todd,Petra E.
TI  - Earnings Functions and Rates of Return
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13780
PY  - 2008
Y2  - February 2008
UR  - http://www.nber.org/papers/w13780
L1  - http://www.nber.org/papers/w13780.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
AB  - The internal rate of return to schooling is a fundamental economic parameter that is often used to assess whether expenditure on education should be increased or decreased. This paper considers alternative approaches to estimating marginal internal rates of return for different schooling levels. We implement a general nonparametric approach to estimate marginal internal rates of return that take into account tuition costs, income taxes and nonlinearities in the earnings-schooling-experience relationship. The returns obtained by the more general method differ substantially from Mincer returns in levels and in their evolution over time. They indicate relatively larger returns to graduating from high school than from graduating from college, although both have been increasing over time.
ER  -