Why do women have a higher rate of return to schooling than men?

The rate of return to schooling is estimated higher for women than for men in most studies. Our explanation is the greater increase in expected lifetime work hours for women compared to men due to increased education. We compute the expected lifetime annual work hours, EXPHRS, by using a deterministic approach and include it in the wage equation. We find that EXPHRS positively affects hourly wages, and the effects are greater for women than for men. By controlling for the effects of EXPHRS, women have a slightly lower rate of return to schooling. It suggests the female-male differential in the rate of return to schooling can be explained by the gender difference in EXPHRS.