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Estimating Private Returns to Education in Mexico

Author

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  • Arnold C. Harberger
  • Sylvia Guillermo-Peón

Abstract

This study explores the relationship between education and wages in Mexico. It contributes to our understanding of the structure of wages, helping explain individuals’ choices concerning education level. First, we estimate the age-earnings functions for each level of education. Then, taking into account some important costs of added years of study, we estimate the net present value of investment in human capital in each of four steps up the educational ladder. We estimate the internal rate of return associated with investment in each successive step considering different scenarios, two of which take into account prospective economic growth and mortality.

Suggested Citation

  • Arnold C. Harberger & Sylvia Guillermo-Peón, 2012. "Estimating Private Returns to Education in Mexico," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 49(1), pages 1-35, May.
    • Handle: RePEc:ioe:cuadec:v:49:y:2012:i:1:p:1-35
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    References listed on IDEAS

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    13. Garen, John, 1984. "The Returns to Schooling: A Selectivity Bias Approach with a Continuous Choice Variable," Econometrica, Econometric Society, vol. 52(5), pages 1199-1218, September.
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    Cited by:

    1. Nadyra Rodriguez Arias & Julia Hirsch & Humberto Banda Ortiz, 2020. "Inversión en educación en México: Rendimientos y riesgo," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 35(1), pages 1-25, April.
    2. Alfredo Palacios & Andrea Alcaraz & Agustín Casarini & Federico Rodriguez Cairoli & Natalia Espinola & Dario Balan & Lucas Perelli & Federico Augustovski & Ariel Bardach & Andrés Pichon‐Riviere, 2023. "The health, economic and social burden of smoking in Argentina, and the impact of increasing tobacco taxes in a context of illicit trade," Health Economics, John Wiley & Sons, Ltd., vol. 32(11), pages 2655-2672, November.

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    More about this item

    Keywords

    Returns to education; age-earnings profiles; Mincer equation;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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