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The Educated Russian's Curse: Returns to Education in the Russian Federation

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Author Info
Hugo Benitez-Silva and Sofia Sheidvasser ()
Abstract

This paper uses the only representative sample of the Russian Federation, the Russian Longitudinal Monitoring Survey, to estimate the returns to education in this ex-communist country. This is one of the first studies to tackle this classic issue in labor economics with the realistic expectation of obtaining results for Russia comparable in quality and reliability to those available in developed countries and other economies in transition. Using standard regression techniques we find that the returns to education in Russia are quite low compared with those reported in the literature on countries throughout the world, in almost no specification reaching higher than 5\%. Moreover, there is virtually no improvement in returns to education in the 1992-99 period, a result somewhat at odds with the suggestion of several studies using Russian data from the early 1990s. When we instrument our main regressor using policy experiments from the 1960s, we find comparable results. We also perform a selectivity correction and discover even lower returns to education for men, although they become slightly higher for women. Additionally, we find extremely low returns to tenure, which can even become negative in certain specifications. These results present a bleak perspective for educated Russians, with negative implications for investments in education at all levels, auguring the imminent erosion of one of Russia's few assets not yet completely devalued, the human capital of its citizens.

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Paper provided by Stony Brook University, Department of Economics in its series Department of Economics Working Papers with number 00-05.

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Length: 38 pages
Date of creation: 2000
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Handle: RePEc:nys:sunysb:00-05

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Related research
Keywords: Returns to Education; Russia; Economic Transition; Instrumental Variables; Selectivity Correction;

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Find related papers by JEL classification:
I2 - Health, Education, and Welfare - - Education
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
P2 - Economic Systems - - Socialist Systems and Transition Economies

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. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281. [Downloadable!] (restricted)
  2. Newell, Andrew & Reilly, Barry, 1997. "Rates of Return to Educational Qualifications in the Transitional Economies," Discussion Papers in Economics 03/97, Department of Economics, University of Sussex. [Downloadable!]
  3. Willis, Robert J., 1987. "Wage determinants: A survey and reinterpretation of human capital earnings functions," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 10, pages 525-602 Elsevier. [Downloadable!] (restricted)
  4. Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1996-1), pages 217-314. [Downloadable!]
  5. 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)
  6. Alan B. Krueger & Jorn-Steffen Pischke, 1992. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," NBER Working Papers 4154, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. 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.
  9. Harmon, Colm & Walker, Ian, 1995. "Estimates of the Economic Return to Schooling for the United Kingdom," American Economic Review, American Economic Association, vol. 85(5), pages 1278-86, December. [Downloadable!] (restricted)
  10. Orazem, Peter F. & Vodopivec, Milan, 1994. "Winners and losers in transition : returns to education, experience, and gender in Slovenia," Policy Research Working Paper Series 1342, The World Bank. [Downloadable!]
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  11. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-76, February. [Downloadable!] (restricted)
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  12. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January. [Downloadable!] (restricted)
  13. David Card, 1994. "Earnings, Schooling, and Ability Revisited," NBER Working Papers 4832, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  15. T. Paul Schultz, 1999. "Labor Market Reforms: Issues, Evidence and Prospects," Working Papers 802, Economic Growth Center, Yale University.
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  16. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-46, September. [Downloadable!] (restricted)
  17. Hugo Benitez-Silva, Moshe Buchinsky, Hiu-Man Chan, Sofia Cheidvasser and John Rust, 1999. "How Large is the BIas in Self-Reported Disability Status?," Department of Economics Working Papers 99-02, Stony Brook University, Department of Economics. [Downloadable!]
  18. Stanovnik, Tine, 1997. "The returns to education in Slovenia," Economics of Education Review, Elsevier, vol. 16(4), pages 443-449, October. [Downloadable!] (restricted)
  19. 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. [Downloadable!] (restricted)
  20. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November. [Downloadable!] (restricted)
  21. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September. [Downloadable!] (restricted)
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  22. Newell, Andrew & Reilly, Barry, 1996. "The gender wage gap in Russia: Some empirical evidence," Labour Economics, Elsevier, vol. 3(3), pages 337-356, October. [Downloadable!] (restricted)
  23. 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)
Full references

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. Sergei Guriev & Barry W. Ickes, 2000. "Microeconomic Aspects of Economic Growth in Eastern Europe and the Former Soviet Union, 1950-2000," William Davidson Institute Working Papers Series 348, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  2. Belton M. Fleisher, 2002. "Higher Education in China - A Growth Paradox?," Development Economics Working Papers 185, East Asian Bureau of Economic Research. [Downloadable!]
  3. Pastore, Francesco & Verashchagina, Alina, 2004. "Private Returns to Human Capital over Transition: A Case Study of Belarus," IZA Discussion Papers 1409, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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