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Returns to Schooling in Bangladesh Revisited: An Instrumental Variable Quantile Regression Approach

Author

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  • RAHMAN, MUSTAFIZUR

    (Distinguished Fellow, Centre for Policy Dialogue (CPD), Dhaka,Bangladesh.)

  • AL-HASAN, MD.

    (Research Associate, Centre for Policy Dialogue (CPD), Dhaka,Bangladesh)

Abstract

The paper focuses on estimation of returns to schooling in the Bangladesh context. Earlier studies which tried to quantify the returns were constrained by a number of factors including the limitations of the measurement techniques that were deployed. This paper revisits the issue and makes an attempt to build on earlier scholarly works through application of quantile regression and instrumental variable quantile regression methods. The paper finds that endogeneity problem leads to underestimation of the returns to schooling, and that the returns tend to vary along the wage distribution, which mean regression models fail to capture. The analysis shows that average returns to schooling for female is higher than that of male. The analysis also shows that returns to schooling tends to be higher as one moves along higher percentiles of wage distribution. This is found to be true both for male and female, as also for rural and urban labour markets.

Suggested Citation

  • Rahman, Mustafizur & Al-Hasan, Md., 2018. "Returns to Schooling in Bangladesh Revisited: An Instrumental Variable Quantile Regression Approach," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 41(02), pages 27-42, June.
  • Handle: RePEc:ris:badest:0821
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    References listed on IDEAS

    as
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    Cited by:

    1. Mustafizur Rahman & Marzuka Md. Al-Hasan, 2019. "Women in Bangladesh Labour Market: Determinants of Participation, Gender Wage Gap and Returns to Schooling," CPD Working Paper 124, Centre for Policy Dialogue (CPD).

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    More about this item

    Keywords

    Returns to Schooling; Instrumental Variable Regression; Quantile Regression;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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