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Cross Country Evidence on the Returns to Education: Patterns and Explanations

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  • Denny, Kevin
  • Harmon, Colm
  • Lydon, Raemonn

Abstract

This Paper examines cross-country variations in the return to schooling for men and women and considers some of the stylised facts that have emerged from the extensive international literature on private returns to schooling. We examine the relationship across countries between these returns and a range of controls that can be grouped into three broad areas (i) supply factors, (ii) demand factors, and (iii) governmental policies and institutional factors. We find that the returns are decreasing in both labour force participation and, in some cases, in the average level of schooling in the population. In the multivariate analysis the only education variables that consistently matter are the proportions completing primary or third level education, which has negative and positive effects respectively. Standard measures of openness such as trade volume have positive effects, and we also find that measures of protection raise the return to schooling. Net inflows of foreign investment are associated with lower schooling returns - a result difficult to reconcile with the argument that capital is complementary to high skill labour and hence increases the skill premium.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3199.

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Date of creation: Feb 2002
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Handle: RePEc:cpr:ceprdp:3199

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References

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  1. 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.
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  8. Austan Goolsbee, 1998. "Does Government R&D Policy Mainly Benefit Scientists and Engineers?," NBER Working Papers 6532, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Aysit Tansel & Yousef Daoud, 2011. "Comparative Essays on Returns to Education in Palestine and Turkey," ERC Working Papers 1102, ERC - Economic Research Center, Middle East Technical University, revised May 2011.
  2. Domeland, Dorte, 2007. "Trade and human capital accumulation: evidence from U.S. immigrants," Policy Research Working Paper Series 4144, The World Bank.
  3. Djavad Salehi-Isfahani & Insan Tunali & Ragui Assaad, 2009. "A Comparative Study Of Returns To Education Of Urban Men In Egypt, Iran, And Turkey," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 145-187.
  4. Harmon, Colm & Hogan, Vincent & Walker, Ian, 2003. "Dispersion in the economic return to schooling," Labour Economics, Elsevier, vol. 10(2), pages 205-214, April.
  5. Fleisher, Belton M. & Peter, Klara Sabirianova & Wang, Xiaojun, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," IZA Discussion Papers 1182, Institute for the Study of Labor (IZA).
  6. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," Working Papers 70, Barcelona Graduate School of Economics.
  7. Kevin Denny & Colm Harmon & Vincent O'Sullivan, 2004. "Education, earnings and skills: a multi-country comparison," IFS Working Papers W04/08, Institute for Fiscal Studies.
  8. Arnaud Chevalier & Kevin Denny & Dorren McMahon, 2003. "A Multi-Country Study of Inter-Generational Educational Mobility," Working Papers 200314, School Of Economics, University College Dublin.
  9. Boris Vujčić & Vedran Šošić, 2009. "Return to Education and the Changing Role of Credentials in the Croatian Labor Market," Transition Studies Review, Springer, vol. 16(1), pages 189-205, May.
  10. Marcel Fafchamps, 2007. "Human Capital, Exports, and Wages," Economics Series Working Papers GPRG-WPS-069, University of Oxford, Department of Economics.
  11. Kevin J Denny & Colm P Harmon & Vincent O’Sullivan, 2003. "Functional Literacy, Educational Attainment and Earnings - A Multi-Country Comparison," Working Papers 200319, School Of Economics, University College Dublin.
  12. Inmaculada García Mainar & Víctor M. Montuenga Gómez, 2004. "Returns to education and to experience within the EU: are there differences between wage earners and the self-employed?," Documentos de Trabajo dt2004-08, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  13. Jorge Augusto Paz, 2005. "Educación y mercado laboral. Revisión de la literatura y algunos hechos para la Argentina," CEMA Working Papers: Serie Documentos de Trabajo. 311, Universidad del CEMA.

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