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School Choice and Earnings: A Case of Indonesia

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  • Mohamad Fahmi

    ()
    (Department of Economics, Padjadjaran University)

Abstract

Public schools in Indonesia are widely perceived have better inputs and to be superior to private schools. Public schools also benefit advantages of high-scoring peer effect as entry to some junior secondary public schools in urban area is based on national score test in elementary school. In this paper, I attempt to confirm the perception of superiority of public school in Indonesia by comparing the yearly earnings of four types of schools group; Public, Private Secular, Private Islam, and Private Christian. I use a large-scale longitudinal observation of individual and household level on socioeconomic and health survey, Indonesia Family Life Survey (IFLS) 2000 to estimate the effectiveness junior secondary education in Indonesia. To correct for sample selection bias, I use the two-step method proposed by Bourguignon et al. As a result of insignificant all selectivity bias coefficients, I use the OLS estimation to calculate the earnings decompositions. The insignificant selection bias coefficients suggest that the OLS estimation is unbiased. I use the Blinder-Oaxaca decomposition with Reimers’ decomposition technique to estimate earning differential between public and three types of private school graduates. The results of earnings decomposition from OLS estimation, suggest that earning of people who graduate from public school are 25 per cent and 35.2 per cent higher than their counterparts from private nonreligious and private Islam. On the other hand, student who schooled at private Christian school enjoys 0.28 per cents higher earnings that public.

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File URL: http://lp3e.fe.unpad.ac.id/wopeds/200914.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by Department of Economics, Padjadjaran University in its series Working Papers in Economics and Development Studies (WoPEDS) with number 200914.

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Length: 33 pages
Date of creation: Sep 2009
Date of revision: Sep 2009
Handle: RePEc:unp:wpaper:200914

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Keywords: Parent choice; Education; School effectiveness; earnings; Indonesia;

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References

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  1. Wayne Strayer, 2002. "The Returns to School Quality: College Choice and Earnings," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 20(3), pages 475-503, July.
  2. Patrick McEwan, 2001. "The Effectiveness of Public, Catholic, and Non-Religious Private Schools in Chile's Voucher System," Education Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(2), pages 103-128.
  3. Newhouse, David & Beegle, Kathleen, 2005. "The effect of school type on academic achievement : evidence from Indonesia," Policy Research Working Paper Series 3604, The World Bank.
  4. Bedi, Arjun S. & Garg, Ashish, 2000. "The effectiveness of private versus public schools: the case of Indonesia," Journal of Development Economics, Elsevier, Elsevier, vol. 61(2), pages 463-494, April.
  5. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 66, pages 281.
  6. Al-Samarrai, Samer & Reilly, Barry, 2006. "Education, Employment and Earnings of Secondary School and University Leavers in Tanzania: Evidence from a Tracer Study," MPRA Paper 129, University Library of Munich, Germany.
  7. Betts, Julian R, 1995. "Does School Quality Matter? Evidence from the National Longitudinal Survey of Youth," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 231-50, May.
  8. Christian Dustmann, 2004. "Parental background, secondary school track choice, and wages," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 209-230, April.
  9. Jimenez, Emmanuel & Lockheed, Marlaine E & Paqueo, Vicente, 1991. "The Relative Efficiency of Private and Public Schools in Developing Countries," World Bank Research Observer, World Bank Group, World Bank Group, vol. 6(2), pages 205-18, July.
  10. Ben Jann, 2004. "DECOMPOSE: Stata module to compute decompositions of wage differentials," Statistical Software Components S4444103, Boston College Department of Economics, revised 12 May 2005.
  11. Anh T. Le & Paul W. Miller, 2003. "Choice of School in Australia: Determinants and Consequences," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(1), pages 55-78.
  12. François Bourguignon & Martin Fournier & Marc Gurgand, 2007. "Selection Bias Corrections Based On The Multinomial Logit Model: Monte Carlo Comparisons," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 21(1), pages 174-205, 02.
  13. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
  14. Neal, Derek, 1997. "The Effects of Catholic Secondary Schooling on Educational Achievement," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 15(1), pages 98-123, January.
  15. Evans, William N & Schwab, Robert M, 1995. "Finishing High School and Starting College: Do Catholic Schools Make a Difference?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(4), pages 941-74, November.
  16. Paul Glewwe & Hanan Jacoby, 1994. "Student Achievement and Schooling Choice in Low-Income Countries: Evidence from Ghana," Journal of Human Resources, University of Wisconsin Press, vol. 29(3), pages 843-864.
  17. Meer, Jonathan, 2007. "Evidence on the returns to secondary vocational education," Economics of Education Review, Elsevier, Elsevier, vol. 26(5), pages 559-573, October.
  18. Ben Jann, 2008. "A Stata implementation of the Blinder-Oaxaca decomposition," ETH Zurich Sociology Working Papers, ETH Zurich, Chair of Sociology 5, ETH Zurich, Chair of Sociology, revised 14 May 2008.
  19. Niaz Asadullah, Mohammad & Chaudhury, Nazmul & Dar, Amit, 2007. "Student achievement conditioned upon school selection: Religious and secular secondary school quality in Bangladesh," Economics of Education Review, Elsevier, Elsevier, vol. 26(6), pages 648-659, December.
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Cited by:
  1. Mohamad Fahmi & Achmad maulana & Arief Anshory Yusuf, 2013. "Complementary Policies to Increase Poor People’s Access to Higher Education: The Case of West Java, Indonesia," Working Papers in Economics and Development Studies (WoPEDS), Department of Economics, Padjadjaran University 201301, Department of Economics, Padjadjaran University, revised Jan 2013.

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