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Education quality and returns to schooling: evidence from migrants in Brazil

Listed author(s):
  • Brotherhood, Luiz Mário
  • Ferreira, Pedro Cavalcanti
  • Santos, Cézar Augusto Ramos

We provide a new education quality index for states within a developing country using 2010 Brazilian data. This measure is constructed based on the notion that the financial returns obtained from an additional year of schooling can be seen as being derived from the value that market forces assign to this education. We use migrant data to estimate returns to schooling of individuals who studied in different states but who work in the same labor market. We find very heterogeneous educational qualities across states: the poorest Brazilian region presents education quality levels that are approximately equal to one-third of the average of all other regions, a gap three times larger than the one suggested by standardized test scores. We compare our index with standardized test scores, educational outcome variables, and public expenditure per schooling stage at the state level, producing new evidence related to education in a large developing country. We conduct an education quality-adjusted development accounting exercise for Brazilian states and find that human capital accounts for 26%-31% of output per worker differences. Adjusting for quality increases human capital’s explanatory power by 60%.

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File URL: http://bibliotecadigital.fgv.br/dspace/bitstream/10438/17842/3/education-quality-and-returns-to-schooling-evidence-from-migrants-in-bra....pdf
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Paper provided by FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its series FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) with number 782.

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Date of creation: 08 Feb 2017
Handle: RePEc:fgv:epgewp:782
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