Measurement error in income and schooling, and the bias for linear estimators
Research output: Working paper › Research
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- Measerr_paper
Submitted manuscript, 454 KB, PDF document
The characteristics of measurement error determine the bias of linear estimators. We propose a method for validating economic survey data allowing for measurement error in the validation source, and we apply this method by validating Survey of Health, Ageing and Retirement in Europe (SHARE) data with Danish administrative registers. We find that measurement error in surveys is classical for annual gross income but non-classical for years of schooling, causing a 21% amplification bias in IV estimators of returns to schooling. Using a 1958 Danish schooling reform, we contextualize our result with an estimate of the income returns to schooling.
Original language | English |
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Place of Publication | Copenhagen |
Publisher | SFI - Det nationale Forskningscenter for Velfærd |
Number of pages | 60 |
Publication status | Published - 2014 |
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ID: 104818373