While it is generally accepted that more education leads to an increase in wages, an extensive liter- ature attempts to quantify this effect. The difficulty lies in disentangling the effect of education on wages from the unobservable personal traits that are correlated with schooling. Because schooling is usually completed before entrance into the labor market, previous research has relied on instrumen- tal variables, such as proximity to colleges or date of birth, 1 or exclusion restrictions in a structural model to identify the effect of schooling on wages. 2 Alternatively, several studies have used data on siblings or twins to identify the treatment of additional years of schooling,.
