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Convexity and Sheepskin Effects in the Human Capital Earnings Function: Recent Evidence for Filipino Men

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  • Norbert R. Schady

Abstract

The issue of possible non-linearities in the relationship between log wages and schooling has received a good deal of attention in the literature. This paper uses data from a recent, high quality household survey for the Philippines, the 1998 Annual Poverty Indicator Survey (APIS), to test the fit of the log-linear specification for Filipino men. The results are based on a number of estimation strategies, including spline regressions, and semi-parametric regressions with a large number of dummies for years of schooling and experience. The basic conclusions of the paper are two. First, there appear to be large differences between the rates of return to education across levels in the Philippines. In particular, the returns to both primary and secondary education are lower than those for tertiary education, a difference which persists even after correcting for differences in direct private costs across levels. Second, within a given level, the last year of schooling is disproportionately rewarded in terms of higher wages. That is, there are clear sheepskin effects associated with graduation from primary school, secondary school, and university. Copyright 2003 Blackwell Publishing Ltd.

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Article provided by Department of Economics, University of Oxford in its journal Oxford Bulletin of Economics and Statistics.

Volume (Year): 65 (2003)
Issue (Month): 2 (05)
Pages: 171-196

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Handle: RePEc:bla:obuest:v:65:y:2003:i:2:p:171-196

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Cited by:
  1. Yamauchi, Futoshi, 2006. "Early childhood nutrition, schooling, and sibling inequality in a dynamic context: evidence from South Africa," FCND discussion papers, International Food Policy Research Institute (IFPRI) 203, International Food Policy Research Institute (IFPRI).
  2. World Bank, 2001. "Philippines : Poverty Assessment, Volume 2. Methodology," World Bank Other Operational Studies 15445, The World Bank.
  3. Sebastián Calónico & Hugo R. Ñopo, 2007. "Returns to Private Education in Peru," IDB Publications 6724, Inter-American Development Bank.
  4. World Bank, 2005. "Malaysia : Firm Competitiveness, Investment Climate and Growth," World Bank Other Operational Studies 8310, The World Bank.
  5. Sebastian Calonico & Hugo Ñopo, 2007. "Retornos a la Educación Privada en Perú," Research Department Publications, Inter-American Development Bank, Research Department 4517, Inter-American Development Bank, Research Department.
  6. Kirdar, Murat G. & Dayioglu-Tayfur, Meltem & Koc, Ismet, 2014. "Does Longer Compulsory Education Equalize Schooling by Gender and Rural/Urban Residence?," IZA Discussion Papers 7939, Institute for the Study of Labor (IZA).
  7. World Bank, 2001. "Philippines : Poverty Assessment, Volume 1. Main Report," World Bank Other Operational Studies 15443, The World Bank.
  8. Fiess, Norbert M. & Verner, Dorte, 2003. "Migration and human capital in Brazil during the 1990s," Policy Research Working Paper Series 3093, The World Bank.
  9. Gibson, John & Fatai, Osaiasi Koliniusi, 2006. "Subsidies, selectivity and the returns to education in urban Papua New Guinea," Economics of Education Review, Elsevier, Elsevier, vol. 25(2), pages 133-146, April.
  10. Yamauchi, Futoshi & Tiongco, Marites, 2013. "Why women are progressive in education? Gender disparities in human capital, labor markets, and family arrangement in the Philippines," Economics of Education Review, Elsevier, Elsevier, vol. 32(C), pages 196-206.
  11. Yamauchi, Futoshi & Liu, Yanyan, 2011. "Girls take over: Long-term impacts of an early stage education intervention in the Philippines," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1144, International Food Policy Research Institute (IFPRI).
  12. Yamauchi, Futoshi & Liu, Yanyan, 2012. "School quality, labor markets and human capital investments : long-term impacts of an early stage education intervention in the Philippines," Policy Research Working Paper Series 6247, The World Bank.
  13. Anna Crespo & Maurício Cortez, 2005. "The Sheepskin Effects Evolution From 1982 To 2002 In Brazil: The Roles Of Labor Supply And Demand Changes," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of 167, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  14. Harounan Kazianga, 2009. "Income Risk and Household Schoo ling Decisions in Burkina Faso," Economics Working Paper Series, Oklahoma State University, Department of Economics and Legal Studies in Business 0903, Oklahoma State University, Department of Economics and Legal Studies in Business.
  15. Kassouf, Ana Lúcia & Dorman, Peter, 2003. "Costs and benefits of eliminating child labour in Brazil," ILO Working Papers, International Labour Organization 374097, International Labour Organization.
  16. Nga Nguyet Nguyen, 2002. "Trends in the education sector from 1993 - 98," Policy Research Working Paper Series 2891, The World Bank.
  17. Aashish Mehta & Hector Villarreal, 2008. "Why do diplomas pay? An expanded Mincerian framework applied to Mexico," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 40(24), pages 3127-3144.

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