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Returns to Schooling in Russia and Ukraine: A Semiparametric Approach to Cross-Country Comparative Analysis

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Author Info
Gorodnichenko, Yuriy (University of Michigan)
Peter, Klara Sabirianova () (University of Michigan and IZA Bonn)

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Abstract

This study provides the first set of estimates of the returns to schooling over an extended period in Russia and Ukraine (1985-2002). There has been an increase in returns to schooling in both countries but the increase is much bigger in Russia than in Ukraine. The intriguing question is why returns to schooling in Russia and Ukraine diverged so much over the transition period while the skill composition of employment did not. Our approach in analyzing the sources of cross-country differences in returns to schooling is to compare the Mincerian earnings functions between the two countries and then to employ decomposition techniques. Using semiparametric methods, we construct counterfactual wage distributions for university and secondary school graduates for Ukraine using the distributions of Russian characteristics, returns to characteristics, and unobservables. This allows us to decompose differences in returns to schooling between the two countries due to differences in the labor market returns (price effect), differences in unobservables (residual effect), and differences in the labor force composition (composition effect). We conclude that of these three effects the price effect makes a major contribution to the observed differences in the returns to schooling.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1325.

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Length: 39 pages
Date of creation: Sep 2004
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Handle: RePEc:iza:izadps:dp1325

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Related research
Keywords: returns to schooling; earnings function; semiparametric approach; decomposition; counterfactual; cross-country analysis; retrospective data; transition; Russia; Ukraine;

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Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
I20 - Health, Education, and Welfare - - Education - - - General
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
P50 - Economic Systems - - Comparative Economic Systems - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Angrist, Joshua D & Krueger, Alan B, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 979-1014, November. [Downloadable!] (restricted)
    Other versions:
  2. Filer, Randall K. & Jurajda, Stepan & Planovsky, Jan, 1999. "Education and wages in the Czech and Slovak Republics during transition," Labour Economics, Elsevier, vol. 6(4), pages 581-593, November. [Downloadable!] (restricted)
  3. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January. [Downloadable!] (restricted)
  4. Olivier Blanchard & Michael Kremer, 1997. "Disorganization," William Davidson Institute Working Papers Series 38, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  5. Robert S. Chase, 1998. "Markets for communist human capital: Returns to education and experience in the Czech republic and Slovakia," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 51(3), pages 401-423, April.
  6. Fleisher, Belton M. & Sabirianova, Klara & 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). [Downloadable!]
    Other versions:
  7. John S. Earle & Klara Z. Sabirianova, 2002. "How Late to Pay? Understanding Wage Arrears in Russia," Journal of Labor Economics, University of Chicago Press, vol. 20(3), pages 661-660, July. [Downloadable!]
    Other versions:
  8. Fleisher, Belton M & Dong, Keyong & Liu, Yunhua, 1996. "Education, Enterprise Organization, and Productivity in the Chinese Paper Industry," Economic Development and Cultural Change, University of Chicago Press, vol. 44(3), pages 571-87, April.
  9. Klara Sabirianova Peter, 2003. "Skill-Biased Transition: The Role of Markets, Institutions, and Technological Change," William Davidson Institute Working Papers Series 2003-616, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  10. Behrman, Jere R. & Rosenzweig, Mark R., 1994. "Caveat emptor: Cross-country data on education and the labor force," Journal of Development Economics, Elsevier, vol. 44(1), pages 147-171, June. [Downloadable!] (restricted)
  11. Brainerd, Elizabeth, 1998. "Winners and Losers in Russia's Economic Transition," American Economic Review, American Economic Association, vol. 88(5), pages 1094-1116, December. [Downloadable!] (restricted)
  12. Flanagan, Robert J., 1998. "Were communists good human capitalists? The case of the Czech Republic," Labour Economics, Elsevier, vol. 5(3), pages 295-312, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tilman Brück & Alexander M. Danzer & Alexander Muravyev & Natalia Weißhaar, 2007. "Determinants of Poverty during Transition: Household Survey Evidence from Ukraine," ESCIRRU Working Papers 2, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  2. Kevin Denny & Patrick Orla Doyle, 2005. "Returns to basic skills in Central and Eastern Europe - a semi-parametric approach," Working Papers 200507, School Of Economics, University College Dublin. [Downloadable!]
  3. Orlowski, Robert & Riphahn, Regina T., 2008. "The East German Wage Structure after Transition," IZA Discussion Papers 3861, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. G. Reza Arabsheibani & Altay Mussurov, 2006. "Returns to Schooling in Kazakhstan: OLS and Instrumental Variables Approach," IZA Discussion Papers 2462, Institute for the Study of Labor (IZA). [Downloadable!]
  5. Yuriy Gorodnichenko & Klara Sabirianova Peter, 2006. "Public Sector Pay and Corruption: Measuring Bribery from Micro Data," IZA Discussion Papers 1987, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Ina Ganguli & Katherine Terrell, 2005. "Wage Ceilings and Floors: The Gender Gap in Ukraine’s Transition," IZA Discussion Papers 1776, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Uwaifo Oyelere, Ruth, 2008. "Understanding Low Average Returns to Education in Africa: The Role of Heterogeneity across Education Levels and the Importance of Political and Economic Reforms," IZA Discussion Papers 3766, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Constant, Amelie & Kahanec, Martin & Zimmermann, Klaus F, 2006. "The Russian-Ukrainian Earnings Divide," CEPR Discussion Papers 5904, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. Gonzales, Naihobe & Uwaifo Oyelere, Ruth, 2009. "Are Returns to Education on the Decline in Venezuela and Does Mission Sucre Have a Role to Play?," IZA Discussion Papers 4206, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Ina Ganguli & Katherine Terrell, 2005. "Institutions, Markets and Men’s and Women’s Wage Inequality: Evidence from Ukraine," IZA Discussion Papers 1724, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  11. J. David Brown & John S. Earle & Vladimir Vakhitov, 2006. "Wages, Layoffs, and Privatization: Evidence from Ukraine," Staff Working Papers 06-126, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
    Other versions:
  12. Amelie Constant & Martin Kahanec & Klaus F. Zimmermann, 2006. "The Russian-Ukrainian Political Divide," IZA Discussion Papers 2530, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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