We compare the returns to human capital in rural areas with those in urban areas, and across the different regions of the US. A key finding is that these returns are considerably lower in rural than in urban areas. Furthermore, failure to correct for spatial dependence bias produces an overestimate of the returns to education at the county-level. We also examine various interactions among the regressors to identify the reasons why the returns to education vary between rural and urban areas.
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Goetz et al. (2004) studied this question.
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