ABSTRACT
In this chapter we return once more to the issue of estimating the returns to education – but we do so using basic structural methods. The discussion in this chapter adds three things to the introductory illustration in Chapter 19. First, we see a simple illustration of how structural models can incorporate the dimension of time. Second, we see how maximum likelihood techniques, introduced in Chapter 15, can allow for very flexible estimation of structural models. Finally, we see what the structural approach illuminates about the issue of the returns to education in developing economies; specifically, we think about how poor households might decide their children’s education in anticipation of the likely returns.
