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Private Returns to Human Capital over Transition: A Case Study of Belarus

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  • Pastore, Francesco

    ()
    (University of Naples II)

  • Verashchagina, Alina

    ()
    (University of Siena)

Abstract

The gradualist approach to economic transition in Belarus would contribute to form the a priori expectation that the rate of return to education is low and the earnings profile by work experience flat, like they supposedly were under central-planning. However, the first available estimates of Mincerian earnings equations based on the Belarusian Household Survey on Incomes and Expenditure suggest that the skill payoff was high in 1996, at about 10.1% per year, and stable. The return to one year of work experience is also high at 5%. This result maintains also after controlling for sample selection bias, despite a general reduction in the annual rate of return to education by about 20-30%. Though, it is ambiguous whether the high-skill payoff is the consequence of market forces coming into play or of policy decisions, considering the pervasive role of the state in the process of wage determination.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1409.

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Length: 40 pages
Date of creation: Nov 2004
Date of revision:
Publication status: published in: Economics of Education Review, 2006, 25(1), 91-107
Handle: RePEc:iza:izadps:dp1409

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Keywords: educational economics; returns to human capital; economic transition; Belarus;

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  1. Orazem, Peter F. & Vodopivec, Milan, 1997. "Value of human capital in transition to market: Evidence from Slovenia," European Economic Review, Elsevier, vol. 41(3-5), pages 893-903, April.
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  4. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  5. Daniel Munich & Jan Svejnar & Daniel Munich, 1999. "Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy," William Davidson Institute Working Papers Series 272, William Davidson Institute at the University of Michigan.
  6. Sofia Cheidvasser, 2000. "The Educated Russian's Curse: Returns to Education in the Russian Federation," Econometric Society World Congress 2000 Contributed Papers 0246, Econometric Society.
  7. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521433297.
  8. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, vol. 9(1), pages 1-16, February.
  9. Adamchik, Vera A. & Bedi, Arjun S., 2000. "Wage differentials between the public and the private sectors: evidence from an economy in transition," Labour Economics, Elsevier, vol. 7(2), pages 203-224, March.
  10. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  11. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
  12. Philippe Aghion & Simon Commander, 1999. "On the dynamics of inequality in the transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 275-298, July.
  13. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766, September.
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Cited by:
  1. Alexander Chubrik & Alaksei Kazlou, 2013. "Costs and Benefits of Labour Mobility between the EU and the Eastern Partnership Partner Countries. Country report: Belarus," CASE Network Studies and Analyses 0462, CASE-Center for Social and Economic Research.
  2. Maksim Yemelyanau, 2009. "Inequality in Belarus from 1995 to 2007," BEROC Working Paper Series 01, Belarusian Economic Research and Outreach Center (BEROC).
  3. Tom Coupe & Hanna Vakhitova, 2011. "Recent Dynamics of Returns to Education in Transition Countries," Discussion Papers 39, Kyiv School of Economics.
  4. Tamar Khitarishvili, 2010. "Assessing the Returns to Education in Georgia," Economics Working Paper Archive wp_608, Levy Economics Institute.
  5. Strawinski, Pawel, 2007. "Changes In Return To Higher Education In Poland 1998-2004," MPRA Paper 5185, University Library of Munich, Germany.
  6. Strawinski, Pawel, 2008. "External Return to Education in Poland," MPRA Paper 11598, University Library of Munich, Germany.
  7. CHEN, Guifu & HAMORI, Shigeyuki, 2009. "Economic returns to schooling in urban China: OLS and the instrumental variables approach," China Economic Review, Elsevier, vol. 20(2), pages 143-152, June.
  8. Tjaša Bartolj & Aleš Ahcan & Aljoša Feldinb & Sašo Polanec, 2012. "Evolution of Private Returns to Tertiary Education during Transition: Evidence from Slovenia," LICOS Discussion Papers 31412, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  9. Arabsheibani, Reza & Mussurov, Altay, 2006. "Returns to Schooling in Kazakhstan: OLS and Instrumental Variables Approach," IZA Discussion Papers 2462, Institute for the Study of Labor (IZA).
  10. Karolina Goraus & Joanna Tyrowicz, 2013. "The Goodwill Effect? Female Access to the Labor Market Over Transition: A Multicountry Analysis," Working Papers 2013-19, Faculty of Economic Sciences, University of Warsaw.
  11. Searing, Elizabeth A.M. & Rios-Avila, Fernando & Lecy, Jesse D., 2013. "The impact of psychological trauma on wages in post-conflict Bosnia and Herzegovina," Social Science & Medicine, Elsevier, vol. 96(C), pages 165-173.

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