2. Assume that college graduates earn 50% more than high school graduates. It is typically thought that without accounting for ability levels, this 50% increase from going to college rather than working straight out of high school would be a biased measurement, as more able people are more likely to earn college degrees. If this is true, would we expect the true underlying effect to be higher than, or lower than 50%? (Hint: figure out the direction of this bias)

2. Assume that college graduates earn 50% more than high school graduates. It is typically thought that without accounting for ability levels, this 50% increase from going to college rather than working straight out of high school would be a biased measurement, as more able people are more likely to earn college degrees. If this is true, would we expect the true underlying effect to be higher than, or lower than 50%? (Hint: figure out the direction of this bias)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 12SCQ: Why dues productivity growth in high-income economies not slow down as it runs into diminishing...

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