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Cross Country Evidence on the Returns to Education: Patterns and Explanations

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  • Denny, Kevin
  • Harmon, Colm
  • Lydon, Raemonn

Abstract

This Paper examines cross-country variations in the return to schooling for men and women and considers some of the stylised facts that have emerged from the extensive international literature on private returns to schooling. We examine the relationship across countries between these returns and a range of controls that can be grouped into three broad areas (i) supply factors, (ii) demand factors, and (iii) governmental policies and institutional factors. We find that the returns are decreasing in both labour force participation and, in some cases, in the average level of schooling in the population. In the multivariate analysis the only education variables that consistently matter are the proportions completing primary or third level education, which has negative and positive effects respectively. Standard measures of openness such as trade volume have positive effects, and we also find that measures of protection raise the return to schooling. Net inflows of foreign investment are associated with lower schooling returns - a result difficult to reconcile with the argument that capital is complementary to high skill labour and hence increases the skill premium.

Suggested Citation

  • Denny, Kevin & Harmon, Colm & Lydon, Raemonn, 2002. "Cross Country Evidence on the Returns to Education: Patterns and Explanations," CEPR Discussion Papers 3199, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3199
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Aysit Tansel & Yousef Daoud, 2011. "Comparative Essays on Returns to Education in Palestine and Turkey," ERC Working Papers 1102, ERC - Economic Research Center, Middle East Technical University, revised May 2011.
    2. Torge Middendorf, 2008. "Returns to Education in Europe – Detailed Results from a Harmonized Survey," Ruhr Economic Papers 0065, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Zubovic, Jovan, 2010. "Razvoj privrede zasnovan na ulaganjima u ljudske resurse i stranim investicijama
      [Economic Growth Based on Investments in Human Resources and Foreign Investments]
      ," MPRA Paper 64092, University Library of Munich, Germany.
    4. Middendorf, Torge, 2008. "Returns to Education in Europe – Detailed Results from a Harmonized Survey," Ruhr Economic Papers 65, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Harmon, Colm & Hogan, Vincent & Walker, Ian, 2003. "Dispersion in the economic return to schooling," Labour Economics, Elsevier, vol. 10(2), pages 205-214, April.
    6. Colm Harmon & Kevin Denny & Vincent O'Sullivan, 2003. "Education, earnings and skills : a multi-country comparison," Open Access publications 10197/649, School of Economics, University College Dublin.
    7. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," Working Papers 70, Barcelona Graduate School of Economics.
    8. Fleisher, Belton M. & Sabirianova, Klara & Wang, Xiaojun, 2005. "Returns to skills and the speed of reforms: Evidence from Central and Eastern Europe, China, and Russia," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 351-370, June.
    9. Domeland, Dorte, 2007. "Trade and human capital accumulation: evidence from U.S. immigrants," Policy Research Working Paper Series 4144, The World Bank.
    10. Kevin Denny & Colm Harmon & Vincent O'Sullivan, 2003. "Functional literacy, educational attainment and earnings : a multi-country comparison," Working Papers 200319, School of Economics, University College Dublin.
    11. Inmaculada García Mainar & Víctor M. Montuenga Gómez, 2004. "Returns to education and to experience within the EU: are there differences between wage earners and the self-employed?," Documentos de Trabajo dt2004-08, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    12. repec:wsi:medjxx:v:01:y:2009:i:02:n:s1793812009000085 is not listed on IDEAS
    13. Boris Vujčić & Vedran Šošić, 2009. "Return to Education and the Changing Role of Credentials in the Croatian Labor Market," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(1), pages 189-205, May.
    14. Matthias Figo & Peter Mayerhofer, 2015. "Strukturwandel und regionales Wachstum - wissensintensive Unternehmensdienste als Wachstumsmotor?," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 145, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    15. Arnaud Chevalier & Kevin Denny & Dorren McMahon, 2003. "A multi-country study of inter-generational educational mobility," Working Papers 200314, School of Economics, University College Dublin.
    16. repec:wfo:wstudy:58503 is not listed on IDEAS
    17. Jorge Augusto Paz, 2005. "Educación y mercado laboral. Revisión de la literatura y algunos hechos para la Argentina," CEMA Working Papers: Serie Documentos de Trabajo. 311, Universidad del CEMA.
    18. repec:zbw:rwirep:0065 is not listed on IDEAS
    19. Djavad Salehi-Isfahani, 2009. "Education and Earnings in The Middle East: A Comparative Study of Returns To Schooling in Egypt, Iran, and Turkey," Working Papers 504, Economic Research Forum, revised Sep 2009.
    20. Marcel Fafchamps, 2009. "Human Capital, Exports, and Earnings," Economic Development and Cultural Change, University of Chicago Press, vol. 58(1), pages 111-141, October.
    21. Marcel Fafchamps, 2007. "Human Capital, Exports, and Wages," Economics Series Working Papers GPRG-WPS-069, University of Oxford, Department of Economics.
    22. Djavad Salehi-Isfahani & Insan Tunali & Ragui Assaad, 2009. "A Comparative Study Of Returns To Education Of Urban Men In Egypt, Iran, And Turkey," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 145-187.

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