Economic Returns to Schooling in Transition: A Case of Mongolia

This paper attempts to obtain the first available estimates on the rate of returns to education for Mongolia and to compare it with returns to education for other transition economies such as CEE and FSU. The Mincerian approach is the basis of our empirical analysis to estimate the returns to human capital. A number of studies estimated the rates of return to education for transition countries and found an increasing trend in terms of the higher premiums for additional schooling years or educational qualifications during the transition period. Returns to education in transition economies vary between 2.8%-5.0% during 1985-1990, whereas between 5.2%-10.1% during 1994-1996. The rate of returns to a year of schooling in Mongolia is estimated as 7.2%, which is higher than most of transition countries. The rate of return to university degree in Mongolia is the highest among transition economies and the returns to other educational qualifications are comparable with CEE and FSU countries.