Question

1. Two people have different levels of education. The person with one more year of education earns more money. A researcher wants to measure the return to education. To do so, he looks at the earnings of these two people and calls the difference between them the “return to one year of education”.
   1. Explain carefully what is wrong with this method (you may use words, graphs, or any other method to explain this, but be clear about what you mean).
   2. Does this method probably give an overestimate or underestimate of the return to education? Explain why.
   3. Now suppose the researcher controls for things like gender, race, and experience. Is this better than just looking at the difference in earnings? Explain what is good and bad about this method.

Answer 1

Pg.NO! - 1 Answer:- Return to Education what you have researched for two peoples in which one of them in Яning moje To CompoЯ ion to second and we have taken difference between their incomes That represent the return to e One year of Education, This only represent the income leved which has rise from one year to other but in actually as in first line. "two people have different levels of Education would be major variable that describes return to Education it has been taken by two people suppose . has post Graduation from nowned university and same I post Graduation is done second person with least Ong gena ion is done by

Pg. No: - 2 recognized university. This would help them to get more package in terms of money in one will Earn moge' to other. It wlually happens to renowned company prefer to take students of candiates from most recognized university. first with giving higher packages. if Second we can consider the Experience with Job in the relevant field at this would also help Then to get more income comparin to each other more Experience more income chance in their relevant field. Example goodle CEO Sundar Pichai FF IIT from Chennai had experiene -e and education & get his salary. in & and in same way same education taken by least institution & Candidate 13 is have less

Pg.NO:-3 Experience then difference in income is normal. It would also leads to difference but only different of one of income not sufficient way to show The differences. so only in different in not major factor that would be describe the situation will only Judge the difference between the two income & it overestimates The things which is does not based or actually on factor working behind it