Black, Dan; Kolesnikova, Natalia; Taylor, Lowell - In: Journal of Labor Economics 27 (2009) 1, pp. 21-47
Economists generally assume, implicitly, that "the return to schooling" is invariant across local labor markets. We demonstrate that this outcome pertains if and only if preferences are homothetic-a special case that seems unlikely. Our theory predicts that returns to education will instead be...