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Author: Nordin, Martin
Resulting in 1 citation.
1. Nordin, Martin
Rooth, Dan-Olof
Increasing Returns to Schooling by Ability? A Comparison Between US and Sweden*
Presented: New York, NY, Society of Labor Economists Annual Meeting, May 2008.
Also: http://client.norc.org/jole/SOLEweb/822P.pdf
Cohort(s): NLSY79
Publisher: National Opinion Research Center - NORC
Keyword(s): Cognitive Ability; Cross-national Analysis; Educational Status; Higher Education; Schooling; Sweden, Swedish

Using US survey data (NLSY) and Swedish register data the relationship between returns to schooling and ability is estimated separately for each country. A significant and positive relationship is found for Sweden, but not for US. The purpose of this study is to propose an explanation to why such differences might occur. While many studies have focused on whether credit constraints results in inefficiencies in the schooling market our study answers the opposite question; if weak credit constraints lead to inefficiencies, i.e. in too much use of the schooling system by the wrong people. We argue that the US schooling system is more effectively sorting out less productive investments in education than the Swedish schooling system, and therefore it is an imperfect allocation of individuals going to higher education in Sweden that make a relationship between returns to schooling and ability to be observed in Sweden but not in the US. Since the relationship between returns to schooling and ability is the same when the schooling systems of the two countries are more similar, i.e., at lower levels of education, is indicative of that our hypothesis can be correct. The empirical findings in this study are of course not convincing evidence on its own. But the results, and the common differences in IV and OLS returns to schooling estimates, suggests and agrees with such an explanation.
Bibliography Citation
Nordin, Martin and Dan-Olof Rooth. "Increasing Returns to Schooling by Ability? A Comparison Between US and Sweden*." Presented: New York, NY, Society of Labor Economists Annual Meeting, May 2008.