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Education and Earnings in The Middle East: A Comparative Study of Returns To Schooling in Egypt, Iran, and Turkey

Listed author(s):
  • Djavad Salehi-Isfahani

    ()

    (Department of Economics, Virginia Tech University)

This paper presents a comparative study of private returns to schooling in Egypt, Iran, and Turkey using similar survey data and a uniform methodology. We employ three surveys for each country that span nearly two decades, ranging from 1987 to 2006. Our aim is to learn from survey data about the signals of rewards that individuals use in their decisions to invest in education. So we pay special attention to differences across countries and over time in the institutions of education and labor markets, and how these differences might be related to the observed patterns of rewards to education. We find a fair amount of consistency in the patterns of returns between the countries, as well as important differences that suggest the influence of institutions. We find that returns to education increase in years of schooling in all three countries, as one would expect in countries with relatively rigid labor markets, where heavy emphasis on higher terminal degrees reduce the value of basic education. Private returns to tertiary relative to upper secondary and vocational education are high, confirming that university education is highly attractive in these countries. Low returns to vocational training relative to general upper secondary, which have been observed in many developing countries, are true in Egypt and Iran, but not Turkey. We attempt to reconcile these facts with the institutional features of the countries and changes over time.

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Paper provided by Economic Research Forum in its series Working Papers with number 504.

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Length: 46 pages
Date of creation: Sep 2009
Date of revision: Sep 2009
Publication status: Published by The Economic Research Forum (ERF)
Handle: RePEc:erg:wpaper:504
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  1. Fatma El-Hamidi, 2006. "General or Vocational Schooling? Evidence on School Choice, Returns, and 'Sheepskin' Effects from Egypt 1998," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(2), pages 157-176.
  2. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
  3. Tansel, Aysit, 1994. "Wage employment, earnings and returns to schooling for men and women in Turkey," Economics of Education Review, Elsevier, vol. 13(4), pages 305-320.
  4. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  5. Özlem Onaran & Nursel Aydiner-Avsar, 2006. "The controversy over employment policy: Low labor costs and openness, or demand policy? A sectoral analysis for Turkey," Department of Economics Working Papers wuwp097, Vienna University of Economics and Business, Department of Economics.
  6. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
  7. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  8. Colm Harmon & Ian Walker & Niels Westergaard-Nielsen (ed.), 2001. "Education and Earnings in Europe," Books, Edward Elgar Publishing, number 2237.
  9. 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.
  10. Robert A. Lawson & Edward Bierhanzl, 2004. "Labor Market Flexibility: An Index Approach to Cross-Country Comparisons," Journal of Labor Research, Transaction Publishers, vol. 25(1), pages 117-126, January.
  11. Bedi, Arjun Singh & Edwards, John H. Y., 2002. "The impact of school quality on earnings and educational returns--evidence from a low-income country," Journal of Development Economics, Elsevier, vol. 68(1), pages 157-185, June.
  12. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, October.
  13. Philip A. Trostel, 2005. "Nonlinearity in the return to education," Journal of Applied Economics, Universidad del CEMA, vol. 8, pages 191-202, May.
  14. Nursel AYDINER-AVSAR & Özlem ONARAN, 2010. "The Determinants Of Employment: A Sectoral Analysis For Turkey," The Developing Economies, Institute of Developing Economies, vol. 48(2), pages 203-231.
  15. Tarik M. Yousef, 2004. "Development, Growth and Policy Reform in the Middle East and North Africa since 1950," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 91-115, Summer.
  16. World Bank, 2004. "Unlocking the Employment Potential in the Middle East and North Africa : Toward a New Social Contract," World Bank Publications, The World Bank, number 15011, October.
  17. 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.
  18. Assaad, Ragui, 1997. "The Effects of Public Sector Hiring and Compensation Policies on the Egyptian Labor Market," World Bank Economic Review, World Bank Group, vol. 11(1), pages 85-118, January.
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