Can education compensate for low ability? Evidence from British data

Kevin Denny and Vincent O'Sullivan

No W04/19, IFS Working Papers from Institute for Fiscal Studies

Abstract: This paper uses cross section data to investigate whether the returns to education vary with the level of ability. Using a measure of cognitive ability based on tests taken at ages 7 and 11 we find, unlike most of the existing literature, clear evidence that the return to schooling is lower for those with higher ability indicating that education can act as a substitute for observed ability. We also estimate quantile regression functions to examine how the return to schooling varies across the conditional distribution of earnings. The results show that the return is lower for higher quantiles, suggesting that education is also a substitute for unobserved ability.

Keywords: Earnings; education; ability (search for similar items in EconPapers)
JEL-codes: J31 (search for similar items in EconPapers)
Pages: 9 pp
Date: 2004-08-09
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (5)

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Journal Article: Can education compensate for low ability? Evidence from British data (2007)
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