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Expansion of Higher Education, Employment and Wages: Evidence from the Russian Transition

  • Natalia Kyui
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    This paper analyzes the effects of an educational system expansion on labour market outcomes, drawing upon a 15-year natural experiment in the Russian Federation. Regional increases in student intake capacities in Russian universities, a result of educational reforms, provide a plausibly exogenous variation in access to higher education. Additionally, the gradual nature of this expansion allows for estimation of heterogeneous returns to education for individuals who successfully took advantage of increasing educational opportunities. Using simultaneous equations models and a non-parametric model with essential heterogeneity, the paper identifies strong positive returns to education in terms of employment and wages. Marginal returns to higher education are estimated to decline for lower levels of individual unobserved characteristics that positively influence higher education attainment. Finally, the returns to higher education are found to decrease for those who, as a result of the reforms, increasingly pursued higher education.

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    Paper provided by Bank of Canada in its series Staff Working Papers with number 13-45.

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    Length: 47 pages
    Date of creation: 2013
    Date of revision:
    Handle: RePEc:bca:bocawp:13-45
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    1. Gregory, Paul R & Kohlhase, Janet E, 1988. "The Earnings of Soviet Workers: Evidence from the Soviet Interview Project," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 23-35, February.
    2. Belzil, Christian, 2007. "The return to schooling in structural dynamic models: a survey," European Economic Review, Elsevier, vol. 51(5), pages 1059-1105, July.
    3. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July.
    4. James J. Heckman & Sergio Urzua & Edward J. Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," NBER Working Papers 12574, National Bureau of Economic Research, Inc.
    5. Heckman, James J. & Li, Xuesong, 2003. "Selection Bias, Comparative Advantage and Heterogeneous Returns to Education: Evidence from China in 2000," IZA Discussion Papers 829, Institute for the Study of Labor (IZA).
    6. James Heckman, 1997. "Instrumental Variables: A Study of Implicit Behavioral Assumptions Used in Making Program Evaluations," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 441-462.
    7. Katz, L.F. & Murphy, K.M., 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Harvard Institute of Economic Research Working Papers 1580, Harvard - Institute of Economic Research.
    8. Katz, Katarina, 1999. "Were there no returns to education in the USSR? Estimates from Soviet-period household data," Labour Economics, Elsevier, vol. 6(3), pages 417-434, September.
    9. Markus Frölich & Blaise Melly, 2013. "Unconditional Quantile Treatment Effects Under Endogeneity," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 31(3), pages 346-357, July.
    10. Wang, Xiaojun & Fleisher, Belton M. & Li, Haizheng & Li, Shi, 2007. "Access to Higher Education and Inequality: The Chinese Experiment," IZA Discussion Papers 2823, Institute for the Study of Labor (IZA).
    11. Thomas J. Kane & Cecilia E. Rouse, 1993. "Labor Market Returns to Two- and Four-Year Colleges: Is a Credit a Credit and Do Degrees Matter?," NBER Working Papers 4268, National Bureau of Economic Research, Inc.
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