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Private returns to human capital over transition: A case study of Belarus

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  • Pastore, Francesco
  • Verashchagina, Alina

Abstract

The gradualist approach to economic transition in Belarus would contribute to form the a priori expectation that the rate of return to education is low and the earnings profile by work experience flat, like they supposedly were under central-planning. However, the first available estimates of Mincerian earnings equations based on the Belarusian Household Survey on Incomes and Expenditure suggest that the skill payoff was high in 1996, at about 10.1% per year, and stable. The return to one year of work experience is also high at 5%. This result maintains also after controlling for sample selection bias, despite a general reduction in the annual rate of return to education by about 20-30%. Though, it is ambiguous whether the high-skill payoff is the consequence of market forces coming into play or of policy decisions, considering the pervasive role of the state in the process of wage determination.
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  • Pastore, Francesco & Verashchagina, Alina, 2006. "Private returns to human capital over transition: A case study of Belarus," Economics of Education Review, Elsevier, vol. 25(1), pages 91-107, February.
    • Handle: RePEc:eee:ecoedu:v:25:y:2006:i:1:p:91-107
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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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