IDEAS home Printed from https://ideas.repec.org/a/eee/injoed/v42y2015icp14-24.html
   My bibliography  Save this article

Estimate of the private return on education in Indonesia: Evidence from sibling data

Author

Listed:
  • Dumauli, Magdalena Triasih

Abstract

This study reexamines the return on education (ROE) in Indonesia to solve the puzzle between the high ROE from previous studies and the low enrollment rate for higher education by taking into account endogeneity and sample selectivity issues. This study finds the OLS estimates of ROE in between 10% and 12%. After controlling for unobserved family background using sibling data, the Household Fixed Effect estimate indicates ROE reduces from 10.8% to 5%. This study argues ROE is not as high as previously estimated and may explain why the enrollment rate for college has been stagnating in Indonesia.

Suggested Citation

  • Dumauli, Magdalena Triasih, 2015. "Estimate of the private return on education in Indonesia: Evidence from sibling data," International Journal of Educational Development, Elsevier, vol. 42(C), pages 14-24.
    • Handle: RePEc:eee:injoed:v:42:y:2015:i:c:p:14-24
    DOI: 10.1016/j.ijedudev.2015.02.012
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0738059315000255
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijedudev.2015.02.012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Esther Duflo, 2001. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review, American Economic Association, vol. 91(4), pages 795-813, September.
    2. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
    3. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    4. Li, Hongbin & Liu, Pak Wai & Zhang, Junsen, 2012. "Estimating returns to education using twins in urban China," Journal of Development Economics, Elsevier, vol. 97(2), pages 494-504.
    5. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, March.
    6. Gödde, Isabel & Schnabel, Reinhold, 1998. "Does Family Background Matter? - Returns to Education and Family Characteristics in Germany," Sonderforschungsbereich 504 Publications 98-60, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    7. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    8. Behrman, Jere R & Deolalikar, Anil B, 1995. "Are There Differential Returns to Schooling by Gender? The Case of Indonesian Labour Markets," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 97-117, February.
    9. Emmanuel Jimenez & Harry Anthony Patrinos, 2009. "Can Cost–Benefit Analysis Guide Education Policy in Developing Countries?," Chapters, in: Robert J. Brent (ed.), Handbook of Research on Cost–Benefit Analysis, chapter 4, Edward Elgar Publishing.
    10. Ashenfelter, Orley & Harmon, Colm & Oosterbeek, Hessel, 1999. "A review of estimates of the schooling/earnings relationship, with tests for publication bias," Labour Economics, Elsevier, vol. 6(4), pages 453-470, November.
    11. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    12. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, vol. 84(5), pages 1157-1173, December.
    13. Behrman, Jere R & Deolalikar, Anil B, 1993. "Unobserved Household and Community Heterogeneity and the Labor Market Impact of Schooling: A Case Study for Indonesia," Economic Development and Cultural Change, University of Chicago Press, vol. 41(3), pages 461-488, April.
    14. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 1999. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," Working Papers 804, Princeton University, Department of Economics, Industrial Relations Section..
    15. Teguh Yudo Wicaksono & Deni Friawan, 2008. "Recent Developments of Higher Education in Indonesia : Issues and Challenges," EABER Working Papers 21949, East Asian Bureau of Economic Research.
    16. Bedi, Arjun S. & Garg, Ashish, 2000. "The effectiveness of private versus public schools: the case of Indonesia," Journal of Development Economics, Elsevier, vol. 61(2), pages 463-494, April.
    17. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    18. Monazza Aslam, 2009. "Education Gender Gaps in Pakistan: Is the Labor Market to Blame?," Economic Development and Cultural Change, University of Chicago Press, vol. 57(4), pages 747-784, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dr Mohammad Rafiqul Islam & Dr Nicholas Sim, 2021. "Education and Food Consumption Patterns: Quasi-Experimental Evidence from Indonesia," Papers 2109.08124, arXiv.org.
    2. Duerrenberger, Nicole & Warning, Susanne, 2018. "Corruption and education in developing countries: The role of public vs. private funding of higher education," International Journal of Educational Development, Elsevier, vol. 62(C), pages 217-225.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khan, Bilal Muhammad, 2019. "Education Occupation Mismatch in Developing countries," MPRA Paper 92324, University Library of Munich, Germany.
    2. Kenayathulla, Husaina Banu, 2013. "Higher levels of education for higher private returns: New evidence from Malaysia," International Journal of Educational Development, Elsevier, vol. 33(4), pages 380-393.
    3. Berger, Johannes & Strohner, Ludwig, 2020. "Documentation of the PUblic Policy Model for Austria and other European countries (PUMA)," Research Papers 11, EcoAustria – Institute for Economic Research.
    4. Sajjad Haider Bhatti & Muhammad Aslam & Jean Bourdon, 2018. "Market Returns to Education in Pakistan, Corrected for Endogeneity Bias," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 23(1), pages 79-96, Jan-June.
    5. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, April.
    6. Thomas Lemieux, 2014. "Occupations, fields of study and returns to education," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1047-1077, November.
    7. Mirjam van Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2009. "Returns for Entrepreneurs versus Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vis-a-vis Wage Employees," Tinbergen Institute Discussion Papers 09-111/3, Tinbergen Institute.
    8. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    9. Adrien Montalbo, 2019. "Education and economic development. The influence of primary schooling on municipalities in nineteenth-century France," Working Papers halshs-02286126, HAL.
    10. Colm Harmon & Hessel Oosterbeek, 2000. "The Returns to Education: A Review of Evidence, Issues and Deficiencies in the Literature," CEE Discussion Papers 0005, Centre for the Economics of Education, LSE.
    11. repec:ucn:wpaper:10197/1099 is not listed on IDEAS
    12. Ge, Suqin, 2013. "Estimating the returns to schooling: Implications from a dynamic discrete choice model," Labour Economics, Elsevier, vol. 20(C), pages 92-105.
    13. Denis Maguain, 2007. "Les rendements de l'éducation en comparaison internationale," Économie et Prévision, Programme National Persée, vol. 180(4), pages 87-106.
    14. Mirjam Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2013. "The higher returns to formal education for entrepreneurs versus employees," Small Business Economics, Springer, vol. 40(2), pages 375-396, February.
    15. Adrien Montalbo, 2019. "Education and economic development. The influence of primary schooling on municipalities in nineteenth-century France," PSE Working Papers halshs-02286126, HAL.
    16. Serneels, Pieter & Beegle, Kathleen & Dillon, Andrew, 2017. "Do returns to education depend on how and whom you ask?," Economics of Education Review, Elsevier, vol. 60(C), pages 5-19.
    17. Ben-Halima, B. & Chusseau, N. & Hellier, J., 2014. "Skill premia and intergenerational education mobility: The French case," Economics of Education Review, Elsevier, vol. 39(C), pages 50-64.
    18. Justin L. Tobias, 2003. "Are Returns to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability–earnings Relationships," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(1), pages 1-29, February.
    19. Ukaj MIC & Mustafa Topxhiu RAHMIJE, 2019. "The returns to investment in education: Some theoretical and empirical insights," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 193-203.
    20. François Rycx & Yves Saks & Ilan Tojerow, 2015. "Does Education Raise Productivity and Wages Equally? The Moderating Roles of Age, Gender and Industry," Working Paper Research 281, National Bank of Belgium.
    21. Cellini, Stephanie Riegg & Chaudhary, Latika, 2014. "The labor market returns to a for-profit college education," Economics of Education Review, Elsevier, vol. 43(C), pages 125-140.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:injoed:v:42:y:2015:i:c:p:14-24. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/international-journal-of-educational-development .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.