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Rate of Return to Education in India: Some Insights

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  • Sikdar, Satadru

    (National Institute of Public Finance and Policy)

Abstract

There is a general tendency in the literature to consider and analyse investment decisions on education, based upon the pecuniary rate of return, without focusing the `intrinsic' advantages of education. Without engaging in the inadequacy of such an approach, this paper presents the relationships between wage and education levels among employed persons from different socio-religious and occupational groups. Based on an analysis of the NSS 68th round data, the results show that in India, there are insignificant relationships between wages and education level, in most cases. However, persons with higher education level are able to get regular salaried jobs. In fact, even for those who are part of the socio-economically deprived sections, higher educational attainments facilitate better jobs. Diversification and exclusion problems are common features of job markets in India, as reflected in different indicators. Further, the paper also finds that wage differences in `formal' and `informal' sectors, `skill mismatch' and volatilities in job markets play important roles in job opportunities and returns to labour.

Suggested Citation

  • Sikdar, Satadru, 2019. "Rate of Return to Education in India: Some Insights," Working Papers 19/270, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:19/270
    Note: Working Paper 270, 2019
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    File URL: https://www.nipfp.org.in/media/medialibrary/2019/06/WP_270_2019.pdf
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    References listed on IDEAS

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    Cited by:

    1. Pallavi Gupta & Satyanarayan Kothe, 2021. "Interpreting the Caste-based Earning Gaps in the Indian Labour Market: Theil and Oaxaca Decomposition Analysis," Papers 2110.06822, arXiv.org.
    2. Chen, Jie & Kanjilal-Bhaduri, Sanghamitra & Pastore, Francesco, 2022. "Updates on Returns to Education in India: Analysis Using PLFS 2018-19 Data," IZA Discussion Papers 15002, Institute of Labor Economics (IZA).
    3. Patnaik, Ila & Pandey, Radhika, 2019. "Savings and capital formation in India," Working Papers 19/271, National Institute of Public Finance and Policy.

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    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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