Abstract

We analyze the role played by amenities in the mean and variance of the return of schooling’s distribution. To do so, we employ a random parameter approach to consider the whole distribution of schooling, and testing how much of the unobserved heterogeneity is reduced when amenities interact with schooling. Using Chilean data sets, the results indicate that amenities play a significant role on the distribution of individuals’ return to schooling by both shifting the average return and reducing the unobserved heterogeneity across workers. © 2023, The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.