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The returns to education in Mexico

  • Eduardo Morales-Ramos

This paper estimates private returns to education in Mexico by means of the Mincer model. The natural ability bias that the literature reports in this type of estimations is tried to be solved using the control function method. Through this method some variables relevant to wage determination are included in the model, such as natural ability index, mother's education, household infrastructure, height and health. Results suggest that the returns to education by year of schooling in Mexico are between 8.2 % and 8.4 %. On the other hand, results by level of education suggest that more education is associated with higher returns. The highest return to education in both absolute and relative terms is provided by Postgraduate education followed by Graduate education. In general, results suggest that there is a convex relationship between education level and wage.

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Paper provided by Banco de México in its series Working Papers with number 2011-07.

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Date of creation: Sep 2011
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Handle: RePEc:bdm:wpaper:2011-07
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  1. J. Edward Taylor & Antonio Yunez-Naude, 2000. "The Returns from Schooling in a Diversified Rural Economy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 287-297.
  2. Robert Haveman & Barbara Wolfe, 1995. "The Determinants of Children's Attainments: A Review of Methods and Findings," Journal of Economic Literature, American Economic Association, vol. 33(4), pages 1829-1878, December.
  3. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 979-1014.
  4. George A. Akerlof & Rachel E. Kranton, 2002. "Identity and Schooling: Some Lessons for the Economics of Education," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1167-1201, December.
  5. Smith, Paula A. & Metzger, Michael R., 1998. "The return to education: Street vendors in Mexico," World Development, Elsevier, vol. 26(2), pages 289-296, February.
  6. Daron Acemoglu, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 779-804.
  7. Daniel Chiquiar, 2004. "Globalization, Regional Wage Differentials and the Stolper-Samuelson Theorem: Evidence from México," Working Papers 2004-06, Banco de México.
  8. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc.
  9. Lopez-Acevedo, Gladys, 2006. "Mexico : two decades of the evolution of education and inequality," Policy Research Working Paper Series 3919, The World Bank.
  10. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
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