Whose Education Matters in the Determination of Household Income: Evidence from a Developing Country
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This paper aims to answer how best to model education attainment, which is an
individual-level variable, in household-level income functions. The accepted practice in
the literature is to use the education level of the household head. This paper compares the
head-of-household model to three competing models and concludes that the maximum or
average level of education in the household is a better explanatory variable of household
income. Least absolute deviations (LAD) estimators and censored least absolute
deviations (CLAD) estimators are used to predict income. Standard errors, which are
robust to violations of homoscedasticity and independence, are generated by a boot-strap
method that replicates the two-stage sample design.