ERIC Number: ED080089
Record Type: RIE
Publication Date: 1973-Jun
Reference Count: 0
A Note on the Interaction of Schooling and Ability.
The effect of schooling and ability on earnings is well documented. However, the existing literature does not demonstrate conclusively whether schooling and ability are complementary determinants of earnings. In particular, recent publications by John Hause and by Paul Taubman and Terence Wales reach opposite conclusions on the existence of an interaction effect. Interestingly enough the two studies make use of the same data set, the NBER-TH sample. The author reexamines and reestimates various tests for the existence of an interaction in the NBER-TH data. He concludes that despite strong theoretical considerations in support of an interaction effect there is very little statistical evidence for a significant interaction. The theoretical importance of an interaction effect is briefly discussed, followed by a discussion of the Hause and Taubman and Wales tests. Finally, various specifications of the earnings function are estimated and exact tests for an interaction are made. The effect of alternative specifications and tests on the results are compared. (Author)
Paul Wachtel, c/o The Graduate School of Business Administration, New York University, 100 Trinity Place, New York, N.Y. 10006
Publication Type: N/A
Education Level: N/A
Authoring Institution: New York Univ., NY. Graduate School of Business Administration.