Separating Uncertainty from Heterogeneity in Life Cycle Earnings

2004/12/10 by F. Cunha, Flávio Cunha, James J. Heckman +1 · 14 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Attendance #Earnings #Econometrics #Economics #Finance #Financial Literacy, Pension, Retirement Analysis #Fiscal Policy and Economic Growth #Housing Market and Economics

paper · pdf · doi:10.1093/oep/gpi019

published in Oxford Economic Papers 57(2), 191-261 (Oxford University Press)

openalex publication_date 2004/12/10 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04

Abstract

This paper develops and applies a method for decomposing cross section variability of earnings into components that are forecastable at the time students decide to go to college (heterogeneity) and components that are unforecastable. About 60% of variability in returns to schooling is forecastable. This has important implications for using measured variability to price risk and predict college attendance.

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• Moving up but not getting ahead: Family socioeconomic position in pregnancy, social mobility, and child cognitive development in the first seven years of life. [europepmc]

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