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A Comparative Study Of Returns To Education Of Urban Men In Egypt, Iran, And Turkey

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  • DJAVAD SALEHI-ISFAHANI

    ()
    (Department of Economics, Virginia Tech, Blacksburg, VA 24061, USA)

  • INSAN TUNALI

    ()
    (Koc University, Department of Economics, Rumelifeneri yalu, Sariyer, Istabbul, Turkey)

  • RAGUI ASSAAD

    ()
    (Humphrey Institute of Public Affairs, 301 19th Ave. S., Minneapolis MN 55455, U.S.A.)

Abstract

This paper presents a comparative study of private returns to schooling of urban men in Egypt, Iran, and Turkey using similar survey data and a uniform methodology. We employ three surveys for each country that span nearly two decades, from the 1980s to 2006, and, to increase the comparability of the estimates across surveys, we focus on urban men 20–54 years old and in full time wage and salary employment. Our aim is to learn how the monetary signals of rewards that guide individual decisions to invest in education are shaped by the institutions of education and labor markets in these countries. Our estimates generally support the stylized facts of the institutions of education and labor markets in Middle Eastern countries. Their labor markets have been described as dominated by the public sector and therefore relatively inflexible, and their education systems as more focused on secondary and tertiary degrees than teaching practical and productive skills. Returns in all countries are increasing in years of schooling, which is contrary to the Mincer assumption of linear returns but consistent with overemphasis on secondary and tertiary degrees. Low returns to vocational training relative to general upper secondary, which have been observed in many developing countries, are observed in Egypt and Iran, but not Turkey. This pattern of returns across countries seems to correspond to how students are selected into vocational and general upper secondary tracks, which is an important part of the education institutions of these countries, and the fact that Turkey's economy is more open than the other two. Greater competitiveness in all three countries over time seems to have increased returns to university education and in few cases to vocational education, but not to general high school.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Middle East Development Journal.

Volume (Year): 01 (2009)
Issue (Month): 02 ()
Pages: 145-187

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Handle: RePEc:wsi:medjxx:v:01:y:2009:i:02:p:145-187

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Keywords: Egypt; Iran; Turkey; returns to education; Mincer equation; labor market institutions; education institutions; labor market flexibility;

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References

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  1. Aysit Tansel, 1999. "Public-Private Employment Choice, Wage Differentials and Gender in Turkey," Working Papers 9913, Economic Research Forum, revised May 1999.
  2. Assaad, Ragui, 1997. "The Effects of Public Sector Hiring and Compensation Policies on the Egyptian Labor Market," World Bank Economic Review, World Bank Group, vol. 11(1), pages 85-118, January.
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  4. Bollinger, Christopher R. & Chandra, Amitabh, 2004. "Iatrogenic Specification Error: A Cautionary Tale of Cleaning Data," IZA Discussion Papers 1093, Institute for the Study of Labor (IZA).
  5. Djavad Salehi-Isfahani & Daniel Egel, 2007. "Youth Exclusion in Iran: The State of Education, Employment and Family Formation," Working Papers e07-2, Virginia Polytechnic Institute and State University, Department of Economics.
  6. Djavad Salehi-Isfahani, 2007. "Poverty, Inequality, and Populist Politics in Iran," Working Papers e07-1, Virginia Polytechnic Institute and State University, Department of Economics.
  7. Tansel, A., 1998. "Determinants of School Attainment of Boys and Girls in Turkey," Papers 789, Yale - Economic Growth Center.
  8. Fatma El-Hamidi, 2005. "Wage Inequality by Education and Gender in MENA: Contrasting the Egyptian and Moroccan Experiences in the 1990s," Working Papers 340, University of Pittsburgh, Department of Economics, revised Feb 2008.
  9. Denny, Kevin & Harmon, Colm & Lydon, Raemonn, 2002. "Cross Country Evidence on the Returns to Education: Patterns and Explanations," CEPR Discussion Papers 3199, C.E.P.R. Discussion Papers.
  10. Tarik M. Yousef, 2004. "Development, Growth and Policy Reform in the Middle East and North Africa since 1950," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 91-115, Summer.
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  12. Fatma El-Hamidi, 2006. "General or Vocational Schooling? Evidence on School Choice, Returns, and 'Sheepskin' Effects from Egypt 1998," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(2), pages 157-176.
  13. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
  14. Psacharopoulos, George & Patrinos, Harry Anthony, 2002. "Returns to investment in education : a further update," Policy Research Working Paper Series 2881, The World Bank.
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  16. Özlem Onaran & Nursel Aydiner-Avsar, 2006. "The controversy over employment policy: Low labor costs and openness, or demand policy? A sectoral analysis for Turkey," Department of Economics Working Papers wuwp097, Vienna University of Economics, Department of Economics.
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  18. Philip A. Trostel, 2005. "Nonlinearity in the return to education," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 191-202, May.
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Cited by:
  1. Aysit Tansel & Yousef Daoud, 2011. "Comparative Essay on Returns to Education in Palestine and Turkey," Koç University-TUSIAD Economic Research Forum Working Papers 1118, Koc University-TUSIAD Economic Research Forum.
  2. Binzel, Christine, 2011. "Decline in Social Mobility: Unfulfilled Aspirations among Egypt's Educated Youth," IZA Discussion Papers 6139, Institute for the Study of Labor (IZA).
  3. Djavad Salehi-Isfahani, 2010. "Human Development in the Middle East and North Africa," Human Development Research Papers (2009 to present) HDRP-2010-26, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).

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