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Convexity and sheepskin effects in the human capital earnings function : recent evidence for Filipino men

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Schady, Norbert R.

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Abstract

Much attention has been paid to the issue of possible nonlinearities in the relationship between log wages and schooling in the literature on both the United States and developing countries. The author uses data from a recent household survey for the Philippines, the 1998 Annual Poverty Indicator Survey, to test the fit of the log-linear specification for Filipino men. He presents results based on various estimation strategies, including spline regressions and semi-parametric regressions with a large number of dummy variables for years of schooling and experience. He concludes that: 1) There appear to be large differences between rates of return to education across different levels in the Philippines. The wage premia for both primary and secondary education are significantly smaller than those for tertiary education. 2) Within each level - primary, secondary, and university - the last year of schooling is disproportionately rewarded in higher wages. That is, there appear to be clear sheepskin effects associated with graduation.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2566.

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Date of creation: 31 Mar 2001
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Handle: RePEc:wbk:wbrwps:2566

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Related research
Keywords: Health Monitoring&Evaluation; Teaching and Learning; Curriculum&Instruction; Gender and Education; Primary Education;

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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. Datt, Gaurav & Hoogeveen, Hans, 2000. "El Nino or El Peso? Crisis, poverty, and income distribution in the Philippines," Policy Research Working Paper Series 2466, The World Bank. [Downloadable!]
  2. Jaeger, David A & Page, Marianne E, 1996. "Degrees Matter: New Evidence on Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 733-40, November. [Downloadable!] (restricted)
  3. repec:fth:prinin:335 is not listed on IDEAS
  4. Jimenez, E. & Lockheed, M.E., 1995. "Public and Private Secondary Education in Developing Countries. A Comparative Study," World Bank - Discussion Papers 309, World Bank.
  5. Olivier Deschenes, 2001. "Unobserved Ability, Comparative Advantage, and the Rising Return to Education in the United States: A Cohort-Based Approach," Working Papers 835, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  6. Bennell, Paul, 1996. "Rates of return to education: Does the conventional pattern prevail in sub-Saharan Africa?," World Development, Elsevier, vol. 24(1), pages 183-199, January. [Downloadable!] (restricted)
  7. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery† & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023 Elsevier. [Downloadable!] (restricted)
  8. Foster, Andrew D & Rosenzweig, Mark R, 1996. "Technical Change and Human-Capital Returns and Investments: Evidence from the Green Revolution," American Economic Review, American Economic Association, vol. 86(4), pages 931-53, September. [Downloadable!] (restricted)
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  9. Farber, Henry S & Gibbons, Robert, 1996. "Learning and Wage Dynamics," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1007-47, November. [Downloadable!] (restricted)
  10. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. 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)
  12. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 120-137 National Bureau of Economic Research, Inc. [Downloadable!]
  13. Strauss, J. & Thomas, D., 1995. "Empirical Modeling of Household and Family Decisions," Papers 95-12, RAND - Reprint Series.
  14. Lam, David & Schoeni, Robert F, 1993. "Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 710-40, August. [Downloadable!] (restricted)
    Other versions:
  15. Belman, Dale & Heywood, John S, 1997. "Sheepskin Effects by Cohort: Implications of Job Matching in a Signaling Model," Oxford Economic Papers, Oxford University Press, vol. 49(4), pages 623-37, October. [Downloadable!] (restricted)
  16. Hungerford, Thomas & Solon, Gary, 1987. "Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 175-77, February. [Downloadable!] (restricted)
  17. Jin Huem Park, 1994. "Returns to Schooling: A Peculiar Deviation from Linearity," Working Papers 714, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  18. Pritchett, Lant, 1996. "Where has all the education gone?," Policy Research Working Paper Series 1581, The World Bank. [Downloadable!]
  19. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier. [Downloadable!] (restricted)
  20. 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)
  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. Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1994. "Endowments and the Allocation of Schooling in the Family and in the Marriage Market: The Twins Experiment," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1131-74, December. [Downloadable!] (restricted)
  23. Deon Filmer & Lant Pritchett, 1999. "The Effect of Household Wealth on Educational Attainment: Evidence from 35 Countries," Population and Development Review, The Population Council, Inc., vol. 25(1), pages 85-120. [Downloadable!] (restricted)
  24. Lanzona, Leonardo A., 1998. "Migration, self-selection and earnings in Philippine rural communities," Journal of Development Economics, Elsevier, vol. 56(1), pages 27-50, June. [Downloadable!] (restricted)
  25. Behrman, Jere R & Birdsall, Nancy, 1983. "The Quality of Schooling: Quantity Alone is Misleading," American Economic Review, American Economic Association, vol. 73(5), pages 928-46, December. [Downloadable!] (restricted)
  26. Glewwe, Paul, 1996. "The relevance of standard estimates of rates of return to schooling for education policy: A critical assessment," Journal of Development Economics, Elsevier, vol. 51(2), pages 267-290, December. [Downloadable!] (restricted)
  27. Heywood, John S., 1994. "How widespread are sheepskin returns to education in the U.S.?," Economics of Education Review, Elsevier, vol. 13(3), pages 227-234, September. [Downloadable!] (restricted)
  28. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January. [Downloadable!] (restricted)
  29. Welch, Finis, 1975. "Human Capital Theory: Education, Discrimination, and Life Cycles," American Economic Review, American Economic Association, vol. 65(2), pages 63-73, May. [Downloadable!] (restricted)
  30. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier. [Downloadable!] (restricted)
    Other versions:
  31. Boissiere, M & Knight, J B & Sabot, R H, 1985. "Earnings, Schooling, Ability, and Cognitive Skills," American Economic Review, American Economic Association, vol. 75(5), pages 1016-30, December. [Downloadable!] (restricted)
  32. Heckman, James & Layne-Farrar, Anne & Todd, Petra, 1996. "Human Capital Pricing Equations with an Application to Estimating the Effect of Schooling Quality on Earnings," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 562-610, November. [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. Sebastian Calonico & Hugo Ñopo, 2007. "Returns to Private Education in Peru," RES Working Papers 4516, Inter-American Development Bank, Research Department. [Downloadable!]
    Other versions:
  2. Nga Nguyet Nguyen, 2002. "Trends in the education sector from 1993 - 98," Policy Research Working Paper Series 2891, The World Bank. [Downloadable!]
  3. Anna Crespo & Maurício Cortez, 2005. "The Sheepskin Effects Evolution From 1982 To 2002 In Brazil: The Roles Of Labor Supply And Demand Changes," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 167, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  4. Fiess, Norbert M. & Verner, Dorte, 2003. "Migration and human capital in Brazil during the 1990s," Policy Research Working Paper Series 3093, The World Bank. [Downloadable!]
  5. Sebastian Calonico & Hugo Ñopo, 2007. "Retornos a la Educación Privada en Perú," RES Working Papers 4517, Inter-American Development Bank, Research Department. [Downloadable!]
  6. Yamauchi, Futoshi, 2006. "Early childhood nutrition, schooling, and sibling inequality in a dynamic context: evidence from South Africa," FCND discussion papers 203, International Food Policy Research Institute (IFPRI). [Downloadable!]
    Other versions:
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