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Mincer Rates Of Return To Education In The Emerging Economy Of Albania

  • Gjipali Arsena

    (Faculty of Business and Economics, Tirana University, Albania)

  • Kristo Suela

    (Faculty of Business and Economics, Tirana University, Albania)

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    In this paper we study the relationship between earnings and education measured in schooling levels. The main hypothesis to be tested is whether higher education levels reward with higher earnings the working labour force in Albania. We use cross section data from the Living Standards Measurement Survey (LSMS) of 2002 and develop a comprehensive framework for our quantitative analysis of the private returns to schooling and private incentives to invest in education. We construct estimates of the private return to each post-compulsory schooling level, taking into account the effects of education on wages. We find that only tertiary education provides significant positive returns with the upper secondary school being less rewarded. This finding might explain the reduced incentives to invest in additional post-compulsory schooling if this would not lead to tertiary.

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    Article provided by Lucian Blaga University of Sibiu, Faculty of Economic Sciences in its journal Studies in Business and Economics.

    Volume (Year): 6 (2011)
    Issue (Month): 2 (August)
    Pages: 27-36

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    Handle: RePEc:blg:journl:v:6:y:2011:i:2:p:27-36
    Contact details of provider: Postal: Lucian Blaga University of Sibiu, Faculty of Economic Sciences Dumbravii Avenue, No 17, postal code 550324, Sibiu, Romania
    Phone: 004 0269 210375
    Fax: 004 0269 210375
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    1. Gary S. Becker, 1975. "Age, Earnings, Wealth, and Human Capital," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition, pages 214-230 National Bureau of Economic Research, Inc.
    2. Gary S. Becker, 1994. "Investment in Human Capital: Effects on Earnings," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 29-58 National Bureau of Economic Research, Inc.
    3. Andrew Weiss, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-154, Fall.
    4. Angel De La Fuente & Juan Francisco Jimeno, 2004. "The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU," Working Papers 152, Barcelona Graduate School of Economics.
    5. Gary S. Becker, 1975. "Investment in Human Capital: Rates of Return," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition, pages 45-144 National Bureau of Economic Research, Inc.
    6. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, Elsevier.
    7. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, 04.
    8. Carneiro, Pedro & Heckman, James J., 2003. "Human Capital Policy," IZA Discussion Papers 821, Institute for the Study of Labor (IZA).
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