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 Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: Earnings And Discrimination

Section: Chapter Questions

Problem 5PA

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