Ethnic patterns of returns to education in Bulgaria

It is widely accepted that disparities in education contribute to the poor labour market outcomes experienced by ethnic minority groups and consequently to their poverty. In this article, I analyse differential educational benefits in Bulgaria and compare returns to education for the Roma minority with the majority population and the Turkish minority. I show that both ethnic minority groups have lower education levels and employment rates than the majority population and that they also have lower returns to education. This result could be related to minorities' lower education quality as well as to discrimination in the labour market. Integration policies should thus aim to improve employability and labour market competence of vulnerable groups starting from school.     

Returns to education in China: a meta-analysis

Within labour economics, returns to education is an area of focused research. Moreover, amongst studies looking at emerging economies, China is the most widely studied economy. While there is a general consensus that returns to education are positive, studies use various datasets and methodologies and consequently present varying estimates of returns to education. We perform a meta-analysis of these estimates of the returns to education in China, addressing issues of heterogeneity in the existing literature and examining whether variations in reported estimates can be explained by study characteristics such as dataset and estimation methods, among others. The meta-regression results show that variations in reported estimates can be accounted for by study characteristics such as data source, estimation method and sample period, among others. The results support the college premium hypothesis and reveal that the returns to education for college graduates are higher than those for other (lower) levels of education.     

A microfoundation for increasing returns in human capital accumulation and the under-participation trap

This paper considers educational investment, wages and hours of market work in an imperfectly competitive labour market with heterogeneous workers and home production. It investigates the degree to which there might be both underemployment in the labour market and underinvestment in education. A central insight is that the ex post participation decision of workers endogeneously generates increasing marginal returns to education. Although equilibrium implies underinvestment in education, optimal policy is not to subsidise education. Instead it is to subsidise labour market participation which we argue might be efficiently targeted as state-provided childcare support.     

Education decisions and labour market outcomes

The financial return to a college degree is an increasing concern amid rising tuition costs and stagnant wages. Using the Education Longitudinal Study of 2002 (ELS:2002), I analyse the effect of post-secondary choices on wages for individuals entering the labour force between 2004 and 2012. Matching methods provide evidence of strong returns to earning a bachelor’s degree for both genders, similar to previous literature. Relative to high school graduates, women see wage benefits of 8–21% for some college attendance. However, men see negative effects of between 6%–13% from some college relative to high school graduates. The returns to a sub-baccalaureate degree as compared to earning some two-year credits is between 8%–25% for women and 8–14% for men. Further, the wage returns to a sub-baccalaureate degree as compared to earning some four-year credits is between 9%–17% for women and 9–20% for men. This translates into an additional $2,500-$4,700 per year for women and an additional $2,900-$6,400 per year for men. Since the average respondent with some four-year college experience has 2.3 years of earned post-secondary credits, shifting some into sub-baccalaureate programs may substantially decrease both the financial and time commitments of post-secondary education while increasing the returns after degree attainment.     

Modelling the distribution of returns on higher education: A microsimulation approach

Cost-sharing policies for higher education have been implemented in several countries in various ways. We argue that to assess their appropriateness and facilitate their implementation it is necessary to develop statistical indicators of the distribution of returns. When starting a higher education programme, the return on a particular degree is uncertain, and risk-adverse students or those from low-income families may be reluctant to enrol if this means taking out a loan. These statistical indicators would therefore be natural inputs of cost-sharing policies intended to preserve the individual economic incentives to go to university and simultaneously provide an insurance role. We present a dynamic microsimulation model of individual lifetime educational output in the French labour market which uses econometric modelling of individual wages, labour market transitions, social security contributions and benefits. It relies largely on labour force survey data and mortality tables. In the standard internal rate of return framework, the model is used to compute the distribution of returns to higher education, for a given generation. The results show that the percentage of negative returns is close to 3.5%.     

The curse of low expectations

We examine how a remedial education programme for primary school‐age children affects parental expectations about their children's future. Using original survey data we collected in Serbia, we investigate whether expectations on labour market prospects and educational attainment change as a consequence of exposure to the Roma Teaching Assistant programme. Our results show that parents of pupils in treated schools expect higher returns to education for their children and are more likely to expect them to achieve a secondary level of education. We also investigate the possible mechanisms in place due to the characteristics of the programme: remedial education and role model.     

The changing composition of academic majors and wage dynamics: Beyond mean returns

This paper studies the effects of the changing composition of academic majors during expansion of higher education on the dynamics of wage distribution. Using a unique dataset constructed from open-ended responses in the Russia Longitudinal Monitoring Survey, we conduct a structural analysis of wage distribution dynamics for higher education graduates over 2002–2016. In addition to the standard mean wage estimations across majors we explore within-major and across-cohort variation, as well as major-specific permanent and transitory variance components and their time paths.The results suggest that changing wage inequality among university graduates is due to both changes in skill prices and wage shocks induced by economic fluctuations. Moreover, variation in skill prices relates to equilibrium effects induced by changes in the supply of graduates specialized in different fields. Uneven expansion in certain majors induces labor market saturation and leads to an increase in the wage variance of graduates from the fastest growing majors. The estimation results also show the importance of accounting for within-major heterogeneity across cohorts, which could reflect differences in student ability distribution, changes in academic content, and changes in educational quality over time. Finally, this study suggests that focusing only on mean wage returns, without assessing the distributional implications, might substantially understate the labor market impact of the changing major composition.     

Student loans and the allocation of graduate jobs

Higher education is not just a costly signal of native talent but also a means of raising a person's ability to hold a graduate job (and at least a certain educational achievement is required to get one). Graduate jobs differentiated by quality are allocated to graduates differentiated by native talent and parental wealth through a tournament. Non‐graduates jobs pay a fixed wage to those who do not participate in the tournament. Assuming that credit is rationed, some poor school leavers will go straight into the non‐graduate labour market even if they are talented enough to get a higher education and participate in the tournament. Some others will buy the same amount of higher education and end up doing graduate jobs of the same quality as less talented but richer school leavers. We show that student loans improve job matching and bring educational investments closer to efficiency. If the size of the loan is not very large, some poor school leavers will still be liquidity‐constrained and thus buy the same amount of higher education as less talented but richer ones. In that case, the former will get a productivity bonus. But raising the size of the loan to such a level that nobody is liquidity‐constrained could be socially optimal only if social preferences were extremely egalitarian.     

Returns to education: the Greek experience, 1988–1999

This article provides estimates of private rates of return to education in Greece derived from Mincerian-type earnings equations. The data come from the latest three household surveys of the country covering the 1988 to 1999 period. The empirical evidence suggests that: rates of return associated with female high school and university graduates exceed the respective rates for male graduates; rates of return pertaining to tertiary education graduates are increasing over time, whereas the corresponding rates for secondary education graduates follow an inverted U-shaped pattern and dropouts from any education degree end up with rates of return lower than the rates associated with the immediately preceding education level.     

The East German wage structure after transition1

Abstract We extend the literature on transition economies’ wage structures by investigating the returns to tenure and experience. This study applies recent panel data and estimation approaches that control for hitherto neglected biases. We compare the life‐cycle structure of East and West German wages for fulltime employed men in the private sector. The patterns in the returns to seniority are similar for the two regional labour markets. The returns to experience lag behind in the East German labour market, even almost 20 years after unification, with significant differences particularly for high‐skill workers. The results are robust when only individuals who started their labour market career in the market economy are considered. We expect that the different returns are related to the heterogeneity of work experience gathered in East as compared with West Germany.     

Career, experience and returns to human capital: is the dual labour market hypothesis relevant for the UK?

This paper investigates the relationship between career status, labour market experience and returns to human capital accumulation in the context of a two-tier, career and non-career labour market. Using micro data from the British Household Panel Survey (BHPS), this study detects wage and employment mechanisms that differ between these two tiers of workers. The paper finds no support for the hypothesis of strict duality, by which the returns to education are expected to differ across labour market segments, with the returns in career employment being high and positive and the returns in the non-career sector being close to zero. The paper, however, finds support for significant returns to current tenure only in the career sector and also for the scarring hypothesis, according to which part-time employment and unemployment experience have a negative effect on participation and earnings in the career sector. Finally, there is evidence that only non-career earnings are significantly affected by local demand conditions, in contrast to earnings in the career sector. Career status is modelled as an endogenous variable subject to an initial job choice.     

Measuring heterogeneity in the returns to education using an education reform

In this paper, we explore the impact of a mandatory education reform as well as pre-reform availability of schools above the mandatory level, on educational attainment and returns to education in Norway. We contribute to the existing literature by focusing on the heterogeneity of the impact of reforms. Our results indicate that increased compulsory education from seven to nine years increased the general level of education beyond the compulsory education. We also find that the effect of family background on educational attainment was weaker after the reform. The average treatment effect on returns to education is surprisingly high for education of intermediate duration. This means that increasing the general level of education potentially generates high returns in the form of wages. We also find that the effect of treatment on the treated on the returns to education is 1-4 percentage points higher than the average treatment effect.     

Can information and counseling help students from poor rural areas go to high school? Evidence from China

Recent studies have shown that only about two-thirds of the students from poor, rural areas in China finish junior high school and enter high school. One factor that may be behind the low rates of high school attendance is that students may be misinformed about the returns to schooling or lack career planning skills. We therefore conduct a cluster-randomized controlled trial (RCT) using a sample of 131 junior high schools and more than 12,000 students to test the effects of providing information on returns or career planning skills on student dropout, academic achievement and plans to go to high school. Contrary to previous studies, we find that information does not have significant effects on student outcomes. Unlike information, counseling does have an effect. However, the effect is somewhat surprising. Our findings suggest that counseling increases dropouts and seems to lower academic achievement. In our analysis of the causal chain, we conclude that financial constraints and the poor quality of education in junior high schools in poor, rural areas (the venue of the study) may be contributing to the absence of positive impacts on student outcomes from information and counseling. The negative effects of counseling on dropout may also be due to the high and growing wages for unskilled labor (high opportunity costs) in China’s transitioning economy. It is possible that when our counseling curriculum informed the students about the reality of how difficult were the requirements for entering academic high school, it may have induced them to revise their benefit-cost calculations and come to the realization that they are better off dropping out and/or working less hard in school.     

Is the high school dropout rate an increasing function of the proportion of the population in the US cities that is Hispanic? Exploratory evidence

This empirical note seeks to provide preliminary insights into factors that may have influenced the high school dropout rate in the US cities. For some 300-plus cities for the year 2011, OLS estimates reveal that the dropout rate is a decreasing function of both the per cent of the population that is Hispanic and per pupil public education spending at the elementary and secondary levels. In addition, the estimates find that the dropout rate is an increasing function of the per cent of the population that consisted of families with children and that was classified as being at or below the poverty level and the per cent of the population aged 25 years and older that did not have a high school diploma.     

Evaluating universal primary education in Uganda: School fee abolition and educational outcomes

This paper analyzes the effect of lifting primary school fees on educational attainment in Uganda. After the abolishment of school fees in 1997, the enrollment rate more than doubled. Two decades later, we know little about the effect of the policy on educational attainment. With recent data on eight cohorts exposed to free education, we analyze the impact of the policy on years of completed primary school, completion of primary school, and transitioning to secondary school. We use a straightforward regression analysis with cohort dummies and household fixed effects to control for unobserved heterogeneity. We find that lifting school fees had no effect on the years of primary school achievement and the likelihood of primary school completion. We find some weak evidence that the likelihood of those who completed primary education to start secondary school increased after Universal Primary Education.     

Measuring education over time: A comparison of old and new measures of eduction from the Current Population Survey

An established practice by economists when using the Current Population Survey (CPS) data on educational attainment is to use the highest grade completed. However, results shown in this paper suggest that it is better to treat those who attended the 13th grade but did not complete the grade as having some college education rather than associating them with those who only have a high school diploma.     

Impact of Education on Household Welfare in Nigeria

Human capital development, especially higher educational attainment, attaches high premium to its expected economic benefits, in form of better welfare. This study investigates the effect of educational attainment of household head on two indicators of household welfare, namely labour market earnings and household per capita total expenditure on food and non-food items in Nigeria. The study uses the Double Hurdle (DH) model and Quantile Regression (QR) to address these objectives. The empirical results show that returns to schooling are substantially higher at the tertiary level of education compared with primary, secondary, and postgraduate levels of education in Nigeria. Furthermore, additional years of tertiary education attainment by household heads was found to increase household per capita total expenditure more than additional years of primary, secondary and postgraduate education. The implication of these findings is that the improvements in economic welfare of households in Nigerian is driven more by the attainment of tertiary education by household heads, relative to other levels of education.     

ADULT EDUCATION AND EARNINGS: EVIDENCE FROM BRITAIN

This paper uses the National Child Development Study to investigate the relationship between adult schooling and labour market earnings for men. In line with several other studies, the findings suggest that there are returns to all educational qualifications acquired early in life. A variety of statistical models are estimated to try to measure the causal effect of adult education on earnings. Careful analysis reveals that there are no genuine returns to additional qualifications awarded in middle adulthood. The central conclusion of this paper is that rates of return to human capital are greater for individuals who were educated early in life.     

Individual heterogeneity in the returns to schooling: instrumental variables quantile regression using twins data

Considerable effort has been exercised in estimating mean returns to education while carefully considering biases arising from unmeasured ability and measurement error. Recent work has investigated whether there are variations from the “mean” return to education across the population with mixed results. We use an instrumental variables estimator for quantile regression on a sample of twins to estimate an entire family of returns to education at different quantiles of the conditional distribution of wages while addressing simultaneity and measurement error biases. We test whether there is individual heterogeneity in returns to education and find that: more able individuals obtain more schooling perhaps due to lower marginal costs and/or higher marginal benefits of schooling and that higher ability individuals (those further to the right in the conditional distribution of wages) have higher returns to schooling consistent with a non-trivial interaction between schooling and unobserved abilities in the generation of earnings. The estimated returns are never lower than 9 percent and can be as high as 13 percent at the top of the conditional distribution of wages but they vary significantly only along the lower to middle quantiles. Our findings may have meaningful implications for the design of educational policies.     

School dropout and overeducation in developing economies: Feasibility of a budgetary solution†

High rates of school dropout and overeducation are typical problems faced by developing economies. This paper addresses these issues in a unique theoretical model that accounts for complementarity between household and infrastructural investment in education production function on the one hand, and school and higher education on the other hand. The results derived in this paper show that a reallocation of the education budget in favor of school education can solve both problems at the same time if certain conditions are satisfied. Otherwise, reallocation aggravates the problems. This paper questions the efficacy of the widely practiced budget reallocation policy in favor of school education, and in turn, shows that reallocation cannot eliminate school dropouts.