IMPACT OF CHILD QUALITY ON EARNINGS - THE PRODUCTIVITY-OF-SCHOOLING HYPOTHESIS

This paper investigates the relationship between average earnings, edu cation (measured by years of schooling), and rates of return to educat ion for major racial/ethnic groups in the United States. It considers the effect of including previously omitted ''productivity-of-schooling '' (also referred to here as ''child quality'') variables. An upward-s loping average education, rate-of-return-to-education profile exists f or Hispanics, blacks, and whites. Productivity-of-schooling (i.e., chi ld quality) measures-including family size, family composition, abilit y, and parental inputs-significantly affect earnings and rates of retu rn to education. The results here are consistent with Chiswick (1988). Conditions within the family play a larger role in determining the va lue of education for minority males than for white males, a conclusion of obvious interest to policymakers.