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Measuring Returns to Education in Turkey

In: Proceedings of the Conference on Human and Economic Resources

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  • B. Müge Tunaer

    (Dokuz Eylul University)

  • Yaprak Gülcan

    (Dokuz Eylul University)

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    Abstract

    The purpose of this paper is to examine the returns to individually acquired education in Turkey. In contrast to the traditional neo-classical growth theory models, technological progress is embedded within the new endogenous growth models emphasising the endogenous determination of growth process. Thus, human capital stock is incorporated as an endogenous determinant of growth rate into the model that is highly associating the human capital accumulation with the innovative capacity and productivity. With the development of human capital theory, the educational level of the population as one of the key determinants in economic growth, is considered to be affected by the returns to education. The key relationship for the estimation of returns to education was derived by Mincer (Mincer, 1974). Since then, the topic has become centre of focus, and a large number of studies have estimated returns to education. One of the most comprehensive surveys by Psacharopoulos covers the cross – country returns to education estimations for 60 countries, reveals that the developing countries possessed the highest return to an additional year of schooling (1994). Recent country specific studies, on the other hand, while providing evidence on the decreasing returns to education in Norway (Haegeland et. al. 1999), and Austria ( ), empirical findings for China (Heckman & Li, 2003), and Italy (Brunello et. al., 2000) suggest increasing returns to education. Furthermore, returns to education estimations reveal heterogenous results varying accordingly with the degree programmes and gender in Britain (Sloane & O’Leary, 2004), and West Germany (Lauer & Steiner, 2000). Despite the huge literature on the estimation of returns to education in terms of both cross – country and country specific analysis, studies concerning Turkish case remain limited (Tansel, 1994, 1999). This paper aims to make an update contribution to the literature in Turkey. Role of the educational level (primary, secondary, and higher education) in explaining earnings dispersion is analysed by estimating standard Mincerian equation, and using a national level household budget survey data. Estimating earnings equations for 1994 and 2003, preliminary findings demonstrate that returns to education have been instable and changing across the different sectors of the economy. Even though the education has been an important determinant of wage dispersion in Turkey, the findings reveal substantial heterogeneity in returns to different educational levels.

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    Bibliographic Info

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    This chapter was published in:

  • Oguz Esen & Ayla Ogus (ed.), 2006. "Proceedings of the International Conference on Human and Economic Resources," Proceedings of the IUE-SUNY Cortland Conference in Economics, Izmir University of Economics, number 2006, March.
    This item is provided by Izmir University of Economics in its series Papers of the Annual IUE-SUNY Cortland Conference in Economics with number 200606.

    Handle: RePEc:izm:prcdng:200606

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    Related research

    Keywords: returns to education; turkey; developing countries;

    References

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    1. Haegeland, T. & Klette, T.J. & Salvanes, K.G., 1999. "Declining Returns to Education in NOrway? Comparing Estimates Across Cohorts, Sectors and Over Time," Papers 14/99, Norwegian School of Economics and Business Administration-.
    2. Fersterer, Josef & Winter-Ebmer, Rudolf, 1999. "Are Austrian Returns to Education Falling Over Time?," IZA Discussion Papers 72, Institute for the Study of Labor (IZA).
    3. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
    4. Sloane, Peter J. & O'Leary, Nigel C., 2004. "The Return to a University Education in Great Britain," IZA Discussion Papers 1199, Institute for the Study of Labor (IZA).
    5. Tansel, A., 1992. "Wage Employment, Earnings and Returns to Schooling for Men and Women in Turkey," Papers 661, Yale - Economic Growth Center.
    6. Lauer, Charlotte & Steiner, Viktor, 2000. "Returns to education in West Germany: an empirical assessment," ZEW Discussion Papers 00-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Brunello, Giorgio & Comi, Simona & Lucifora, Claudio, 2000. "The Returns to Education in Italy: A New Look at the Evidence," IZA Discussion Papers 130, Institute for the Study of Labor (IZA).
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    Cited by:
    1. World Bank, 2011. "Turkey - Country Economic Memorandum (CEM) : Sustaining High Growth - The Role of Domestic savings : Synthesis Report," World Bank Other Operational Studies 12264, The World Bank.

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