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Are Returns to Education on the Decline in Venezuela and Does Mission Sucre Have a Role to Play?


  • Gonzales, Naihobe

    () (Georgia Tech)

  • Uwaifo Oyelere, Ruth

    () (Morehouse College)


There is anecdotal evidence that the standard of living for the educated has fallen in Venezuela over the last few years. This evidence comes as a surprise because after experiencing an economic downturn in 2002 and 2003, Venezuela's economy has boomed (gross domestic product growth has hovered between 8 and 18%) in large part due to the increase in the price of petroleum. In this paper, we provide evidence that returns to education have decreased significantly in Venezuela from 2002 to 2008. More importantly, we focus on what has led to the decrease in returns. We explore a fall in quality and a supply-demand argument for this decline. Mission Sucre was enacted in September 2003 by President Hugo Chavez to provide free mass tertiary education, in particular targeting the poor and marginalized. The implementation of this program created a sudden increase in the supply of skilled labor and had a direct impact on quality of education. Although we do not claim that 100% of the decline between 2002 and 2008 can be linked to this program, we provide ample evidence that a good part of the falling returns can be linked to Mission Sucre. Specifically, we show that for a 1% increase in the share of Mission Sucre students in the state, returns to university level of education declined by about 5.6 percentage points between 2007 and 2008.

Suggested Citation

  • Gonzales, Naihobe & Uwaifo Oyelere, Ruth, 2009. "Are Returns to Education on the Decline in Venezuela and Does Mission Sucre Have a Role to Play?," IZA Discussion Papers 4206, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp4206

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    References listed on IDEAS

    1. Harry Anthony Patrinos & Chris Sakellariou, 2006. "Economic volatility and returns to education in Venezuela: 1992-2002," Applied Economics, Taylor & Francis Journals, vol. 38(17), pages 1991-2005.
    2. Uwaifo Oyelere, Ruth, 2010. "Africa's education enigma? The Nigerian story," Journal of Development Economics, Elsevier, vol. 91(1), pages 128-139, January.
    3. Gorodnichenko, Yuriy & Sabirianova Peter, Klara, 2005. "Returns to schooling in Russia and Ukraine: A semiparametric approach to cross-country comparative analysis," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 324-350, June.
    4. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    5. 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.
    6. Baland, Jean-Marie & Francois, Patrick, 2000. "Rent-seeking and resource booms," Journal of Development Economics, Elsevier, vol. 61(2), pages 527-542, April.
    7. Kugler, Bernardo & Psacharopoulos, George, 1989. "Earnings and education in Argentina: an analysis of the 1985 Buenos Aires Household Survey," Economics of Education Review, Elsevier, vol. 8(4), pages 353-365, August.
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    9. Chang-Tai Hsieh & Edward Miguel & Daniel Ortega & Francisco Rodriguez, 2011. "The Price of Political Opposition: Evidence from Venezuela's Maisanta," American Economic Journal: Applied Economics, American Economic Association, vol. 3(2), pages 196-214, April.
    10. Uwaifo Oyelere, Ruth, 2008. "Understanding Low Average Returns to Education in Africa: The Role of Heterogeneity across Education Levels and the Importance of Political and Economic Reforms," IZA Discussion Papers 3766, Institute for the Study of Labor (IZA).
    11. Harry Patrinos & Cristobal Ridao-Cano & Chris Sakellariou, 2009. "A note on schooling and wage inequality in the public and private sector," Empirical Economics, Springer, vol. 37(2), pages 383-392, October.
    12. Patrinos, Harry Anthony & Ridao-Cano, Cris & Sakellariou, Chris, 2006. "Estimating the returns to education : accounting for heterogeneity in ability," Policy Research Working Paper Series 4040, The World Bank.
    13. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
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    15. Fiszbein, Ariel & Psacharopoulos, George, 1993. "A cost-benefit analysis of educational investment in Venezuela: 1989 update," Economics of Education Review, Elsevier, vol. 12(4), pages 293-298, December.
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    Cited by:

    1. Uwaifo Oyelere, Ruth, 2015. ""A Flop or a Success?" An Evaluation of the Welfare Impacts of the 6-3-3-4 Education System in Nigeria," IZA Discussion Papers 9131, Institute for the Study of Labor (IZA).
    2. repec:ilo:ilowps:487581 is not listed on IDEAS
    3. Sparreboom, Theo. & Staneva, Anita., 2015. "Structural change, employment and education in Mozambique," ILO Working Papers 994875813402676, International Labour Organization.

    More about this item


    schooling; human capital; returns to education; Venezuela; policy reform;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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