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Returns to Education: New Evidence for India, 1983-1999

  • Puja Vasudeva Dutta

This paper estimates the returns to education for adult male workers in regular and casual wage employment using Indian national survey data at three points in time spanning almost two decades. Both standard and augmented Mincerian wage equations are estimated using a set of human capital measures and other controls after addressing the issue of potential selection bias. This paper finds that the returns to education are significantly different for the two types of workers—while casual workers face at best flat returns to education, the returns to education for regular workers are positive and U-shaped with respect to education levels. There is also some evidence of a widening wage gap between regular workers with graduate and primary education that could possibly be a consequence of trade liberalization and other reforms pursued during the 1990s.

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Article provided by Taylor & Francis Journals in its journal Education Economics.

Volume (Year): 14 (2006)
Issue (Month): 4 ()
Pages: 431-451

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Handle: RePEc:taf:edecon:v:14:y:2006:i:4:p:431-451
DOI: 10.1080/09645290600854128
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  8. Geeta Gandhi Kingdon, 1998. "Does the labour market explain lower female schooling in India?," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 39-65.
  9. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
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  11. Appleton, Simon & Hoddinott, John & Knight, John, 1996. "Primary Education as an Input into Post-primary Education: A Neglected Benefit," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 211-19, February.
  12. Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-29, April.
  13. Andrew Newell & Barry Reilly, 1999. "Rates of Return to Educational Qualifications in the Transitional Economies," Education Economics, Taylor & Francis Journals, vol. 7(1), pages 67-84.
  14. Newell, Andrew & Reilly, Barry, 1997. "Rates of Return to Educational Qualifications in the Transitional Economies," Discussion Papers in Economics 03/97, Department of Economics, University of Sussex.
  15. Whitney K. Newey, 2009. "Two-step series estimation of sample selection models," Econometrics Journal, Royal Economic Society, vol. 12(s1), pages S217-S229, 01.
  16. Geeta Gandhi Kingdon & Jeemol Unni, 2001. "Education and Women's Labour Market Outcomes in India," Education Economics, Taylor & Francis Journals, vol. 9(2), pages 173-195.
  17. 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.
  18. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
  19. Kingdon, Geeta, 1996. "The Quality and Efficiency of Private and Public Education: A Case-Study of Urban India," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 57-82, February.
  20. Puja Vasudeva Dutta, 2005. "Accounting for Wage Inequality in India," PRUS Working Papers 29, Poverty Research Unit at Sussex, University of Sussex.
  21. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, World Bank Group, vol. 11(1), pages 33-57, January.
  22. Jorge Saba Arbache & Andy Dickerson & Francis Green, 2004. "Trade Liberalisation and Wages in Developing Countries," Economic Journal, Royal Economic Society, vol. 114(493), pages F73-F96, 02.
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