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Returns to Education: New Evidence for India, 1983-1999

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  • Puja Vasudeva Dutta

Abstract

This paper estimates the returns to education for adult male workers in regular and casual wage employment using Indian national survey data at three points in time spanning almost two decades. Both standard and augmented Mincerian wage equations are estimated using a set of human capital measures and other controls after addressing the issue of potential selection bias. This paper finds that the returns to education are significantly different for the two types of workers—while casual workers face at best flat returns to education, the returns to education for regular workers are positive and U-shaped with respect to education levels. There is also some evidence of a widening wage gap between regular workers with graduate and primary education that could possibly be a consequence of trade liberalization and other reforms pursued during the 1990s.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Education Economics.

Volume (Year): 14 (2006)
Issue (Month): 4 ()
Pages: 431-451

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Handle: RePEc:taf:edecon:v:14:y:2006:i:4:p:431-451

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Related research

Keywords: Rate of return; human capital; India;

References

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  1. Newell, Andrew & Reilly, Barry, 1997. "Rates of Return to Educational Qualifications in the Transitional Economies," Discussion Papers in Economics, Department of Economics, University of Sussex 03/97, Department of Economics, University of Sussex.
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  4. Whitney K. Newey, 2009. "Two-step series estimation of sample selection models," Econometrics Journal, Royal Economic Society, vol. 12(s1), pages S217-S229, 01.
  5. Christopher R. Bollinger & Amitabh Chandra, 2003. "Iatrogenic Specification Error: A Cautionary Tale of Cleaning Data," NBER Technical Working Papers 0289, National Bureau of Economic Research, Inc.
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  8. Jorge Saba Arbache & Andy Dickerson & Francis Green, 2004. "Trade Liberalisation and Wages in Developing Countries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(493), pages F73-F96, 02.
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  11. Bennell, Paul, 1996. "Rates of return to education: Does the conventional pattern prevail in sub-Saharan Africa?," World Development, Elsevier, vol. 24(1), pages 183-199, January.
  12. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, Econometric Society, vol. 56(2), pages 259-93, March.
  13. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  14. Sahn, David E. & Alderman, Harold, 1988. "The effects of human capital on wages, and the determinants of labor supply in a developing country," Journal of Development Economics, Elsevier, vol. 29(2), pages 157-183, September.
  15. Appleton, Simon & Hoddinott, John & Knight, John, 1996. "Primary Education as an Input into Post-primary Education: A Neglected Benefit," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 211-19, February.
  16. Geeta Gandhi Kingdon & Jeemol Unni, 2001. "Education and Women's Labour Market Outcomes in India," Education Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(2), pages 173-195.
  17. Banerjee, Biswajit & Knight, J. B., 1985. "Caste discrimination in the Indian urban labour market," Journal of Development Economics, Elsevier, vol. 17(3), pages 277-307, April.
  18. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
  19. Foster, Andrew D & Rosenzweig, Mark R, 1996. "Technical Change and Human-Capital Returns and Investments: Evidence from the Green Revolution," American Economic Review, American Economic Association, vol. 86(4), pages 931-53, September.
  20. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, World Bank Group, World Bank Group, vol. 11(1), pages 33-57, January.
  21. Kingdon, Geeta, 1996. "The Quality and Efficiency of Private and Public Education: A Case-Study of Urban India," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 57-82, February.
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Citations

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Cited by:
  1. Escobal, Javier & Flores, Eva, 2009. "Maternal Migration and Child Well-Being in Peru," MPRA Paper 56463, University Library of Munich, Germany.
  2. Tushar Agrawal, 2011. "Returns to education in India: Some recent evidence," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2011-017, Indira Gandhi Institute of Development Research, Mumbai, India.
  3. Kamal Vatta & Takahiro Sato, 2012. "Indian Labour Markets and Returns to Education, 1983 to 2009-10," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University DP2012-33, Research Institute for Economics & Business Administration, Kobe University.
  4. Azam, Mehtabul, 2009. "Changes in Wage Structure in Urban India 1983-2004: A Quantile Regression Decomposition," IZA Discussion Papers 3963, Institute for the Study of Labor (IZA).
  5. Vegard Iversen & Adriaan Kalwij & Arjan Verschoor & Amaresh Dubey, 2014. "Caste Dominance and Economic Performance in Rural India," Economic Development and Cultural Change, University of Chicago Press, vol. 62(3), pages 423 - 457.
  6. Asadullah, Niaz & Kambhampati, Uma & López Bóo, Florencia, 2012. "Social Divisions in School Participation and Attainment in India: 1983-2004," IZA Discussion Papers 6329, Institute for the Study of Labor (IZA).
  7. Geeta Kingdon & Nicolas Theopold, 2006. "Do returns to education matter to schooling participation?," Economics Series Working Papers GPRG-WPS-052, University of Oxford, Department of Economics.
  8. Takahiro Ito, 2009. "Education and Its Distributional Impacts on Living Standards," Global COE Hi-Stat Discussion Paper Series gd09-080, Institute of Economic Research, Hitotsubashi University.

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