Returns to Education in the Economic Transition : A Systematic Assessment Using Comparable Data
This paper examines the assertion that returns to schooling increase as an economy transitions to a market environment. This claim has been difficult to assess as existing empirical evidence covers only a few countries over short time periods. A nu...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/05/7576044/returns-education-economic-transition-systematic-assessment-using-comparable-data http://hdl.handle.net/10986/7079 |
| Summary: | This paper examines the assertion that
returns to schooling increase as an economy transitions to a
market environment. This claim has been difficult to assess
as existing empirical evidence covers only a few countries
over short time periods. A number of studies find that
returns to education increased from the
"pre-transition" period to the "early
transition" period. It is not clear what has happened
to the skills premium through the late 1990s, or the period
thereafter. The authors use data that are comparable across
countries and over time to estimate returns to schooling in
eight transition economies (Bulgaria, Czech Republic,
Hungary, Latvia, Poland, Russia, Slovak Republic, and
Slovenia) from the early transition period up to 2002. In
the case of Hungary, they capture the transition process
more fully, beginning in the late 1980s. Compared to the
existing literature, they implement a more systematic
analysis and perform more comprehensive robustness checks on
the estimated returns, although at best they offer only an
incomplete solution to the problem of endogeneity. The
authors find that the evidence of a rising trend in returns
to schooling over the transition period is generally weak,
except in Hungary and Russia where there have been sustained
and substantial increases in returns to schooling. On
average, the estimated returns in the sample are comparable
to advanced economy averages. There are, however,
significant differences in returns across countries and
these differentials have remained roughly constant over the
past 15 years. They speculate on the likely institutional
and structural factors underpinning these results, including
incomplete transition and significant heterogeneity and
offsetting developments in returns to schooling within countries. |
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