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School Repetition, Dropouts, and the Rates of Return to Schooling: The Case of Indonesia


  • Behrman, Jere R
  • Deolalikar, Anil B


Standard Estimates of the rates of return to primary schooling in most developing countries are high, and have been used to support advocacy of increased investments in primary schooling. But the standard estimates ignore repetition and dropout experience. This paper develops a procedure for estimating the impact of repetition and dropout rates and applies it to Indonesian data. The results are striking, suggesting that standard procedures overstate substantially the economic returns to schooling in Indonesia (eg. by 38 to 78 percent for primary schooling), distort the pattern of estimated returns across schooling levels by overestimating especially the returns to the lower schooling levels, and misrepresent the relative returns to schooling investments among groups identified by sex, rural-urban residence, and age. Copyright 1991 by Blackwell Publishing Ltd

Suggested Citation

  • Behrman, Jere R & Deolalikar, Anil B, 1991. "School Repetition, Dropouts, and the Rates of Return to Schooling: The Case of Indonesia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(4), pages 467-480, November.
  • Handle: RePEc:bla:obuest:v:53:y:1991:i:4:p:467-80

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    References listed on IDEAS

    1. von Braun, Joachim & Pandya-Lorch, Rajul, 1991. "Income sources of malnourished people in rural areas: Microlevel information and policy implications," IFPRI working papers 5, International Food Policy Research Institute (IFPRI).
    2. repec:pje:journl:article1982winii is not listed on IDEAS
    3. John C. H. Fei & Gustav Ranis & Shirley W. Y. Kuo, 1978. "Growth and the Family Distribution of Income by Factor Components," The Quarterly Journal of Economics, Oxford University Press, vol. 92(1), pages 17-53.
    4. Glewwe, Paul, 1986. "The distribution of income in Sri Lanka in 1969-1970 and 1980-1981 : A decomposition analysis," Journal of Development Economics, Elsevier, vol. 24(2), pages 255-274, December.
    5. Quan, Nguyen T., 1989. "Concentration of income and land holdings : Prediction by latent variables model and partial least squares," Journal of Development Economics, Elsevier, vol. 31(1), pages 55-76, July.
    6. Fields, Gary S, 1979. "Income Inequality in Urban Colombia: A Decomposition Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(3), pages 327-341, September.
    7. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-156, February.
    8. Hans De Kruijk, 1987. "Sources of Income Inequality in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 26(4), pages 659-672.
    9. Graham Pyatt & Chau-nan Chen & John Fei, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, Oxford University Press, vol. 95(3), pages 451-473.
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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Rossana Patrón, 2011. "When more schooling is not worth the effort: another look at the dropout decisions of disadvantaged students in Uruguay," Documentos de Trabajo (working papers) 0511, Department of Economics - dECON.
    2. repec:eee:labchp:v:3:y:1999:i:pb:p:2859-2939 is not listed on IDEAS
    3. Elizabeth M. King & Peter F. Orazem & Elizabeth M. Paterno, 2016. "Promotion with and without Learning: Effects on Student Enrollment and Dropout Behavior," World Bank Economic Review, World Bank Group, vol. 30(3), pages 580-602.
    4. Lachler, Ulrich, 1998. "Education and earnings inequality in Mexico," Policy Research Working Paper Series 1949, The World Bank.
    5. Gurleen Popli, 2005. "Rising Wage Inequality in Mexico: Structural Reforms or Changing Labor Market Institutions?," Working Papers 2005016, The University of Sheffield, Department of Economics, revised Nov 2005.
    6. Funkhouser, Edward, 1999. "Cyclical economic conditions and school attendance in Costa Rica," Economics of Education Review, Elsevier, vol. 18(1), pages 31-50, February.
    7. Behrman, Jere R., 1999. "Schooling in Asia: Selected microevidence on determinants, effects, and policy implications," Journal of Asian Economics, Elsevier, vol. 10(2), pages 147-194.
    8. Aashish Mehta & Hector Villarreal, 2008. "Why do diplomas pay? An expanded Mincerian framework applied to Mexico," Applied Economics, Taylor & Francis Journals, vol. 40(24), pages 3127-3144.
    9. Gurleen K. Popli, 2011. "Changes in Human Capital and Wage Inequality in Mexico," Oxford Development Studies, Taylor & Francis Journals, vol. 39(3), pages 369-387, February.
    10. Tobing, Elwin, 2011. "Taxation, human capital formation, and long-run growth with private investment in education," Journal of Asian Economics, Elsevier, vol. 22(1), pages 48-60, February.
    11. Suzanne Duryea, 1998. "Children's Advancement Through School in Brazil: The Role of Transitory Shocks to Household Income," Research Department Publications 4124, Inter-American Development Bank, Research Department.
    12. Horowitz, Andrew W., 1999. "Ranking Rates of Return to Education: Legitimacy and an Explicit Diagnostic," Journal of Policy Modeling, Elsevier, vol. 21(7), pages 781-797, December.
    13. Suzanne Duryea, 1998. "El avance de los niños a lo largo del sistema educativo en Brasil: el papel de las sacudidas transitorias del ingreso familiar," Research Department Publications 4125, Inter-American Development Bank, Research Department.
    14. Patrinos, Harry Anthony & Psacharopoulos, George, 1992. "Socioeconomic and ethnic determinants of grade repetition in Bolivia and Guatemala," Policy Research Working Paper Series 1028, The World Bank.
    15. Behrman, Jere R., 1996. "Measuring the effectiveness of schooling policies in developing countries: Revisiting issues of methodology," Economics of Education Review, Elsevier, vol. 15(4), pages 345-364, October.
    16. Susan W. Parker & Luis Rubalcava & Graciela Teruel, 2002. "Schooling Inequality among the Indigenous: A Problem of Resources or Language Barriers?," Research Department Publications 3134, Inter-American Development Bank, Research Department.

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