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Returns to Education and Education-Occupation Mismatch within a Transition Economy. Empirical Analysis for the Russian Federation



This paper makes a thorough analysis of the returns to tertiary education and education-occupation matches within a transition economy and compares these returns to similar returns in a developed economy. This study shows through the example of the Russian Federation that the increase in the returns to education which happened in previous years does not indicate that the labor market is becoming closer to that of developed countries. The standard estimation of the returns to education is deconstructed in three parts characterizing the labor market: education-occupation match, payment for occupations and payment for productivity within occupations. First, I compare the non-parametric estimation of wage distributions by educational and occupational groups within the Russian labor market and a developed country's labor market (I take France as an example). Second, I estimate a joint reduced-form model of the educational choice, labor market participation, placement of employees among occupational categories and wage formation. This joint model allows us to take into account correlations between unobservable factors that simultaneously influence the educational choice, occupational choice and final wage. A wide range of explanatory variables is used, characterizing not only individuals, but also their households, job, industries of work and regions. This allows us to analyze the influence of the family's network on the placements among occupational categories and wage formation. I take into account the observed heterogeneity of returns to education among the analyzed population. The results show the advantages of the proposed approach for the analysis of transition labor markets when compared with the standard approaches to transition economies

Suggested Citation

  • Natalia Kyui, 2010. "Returns to Education and Education-Occupation Mismatch within a Transition Economy. Empirical Analysis for the Russian Federation," Documents de travail du Centre d'Economie de la Sorbonne 10031, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  • Handle: RePEc:mse:cesdoc:10031

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    Cited by:

    1. Imed Limam & Abdelwahab Ben Hafaiedh, 2017. "Education, Earnings and Returns to Schooling in Tunisia," Working Papers 1162, Economic Research Forum, revised 12 Jun 2017.

    More about this item


    Returns to education; occupational choice; transition economy;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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