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Estimating the returns to education : accounting for heterogeneity in ability

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  • Patrinos, Harry Anthony
  • Ridao-Cano, Cris
  • Sakellariou, Chris

Abstract

Typically estimates of the benefits of education investments show average private rates of return for the average individual. The average may not be useful for policy. An examination of the distribution of the returns across individuals is needed. The few studies that have examined these patterns focus on high-income countries, showing investments to be more profitable at the top of the income distribution. The implication is that investments may increase inequality. Extending the analysis to 16 East Asian and Latin American countries the authors observe mixed evidence in middle-income countries and decreasing returns in low-income countries. Such differences between countries could be due to more job mobility in industrial countries, scarcity of skills, or differential exposure to market forces.

Suggested Citation

  • 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.
  • Handle: RePEc:wbk:wbrwps:4040
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    2. Marcela Meléndez Arjona & Arturo Harker Roa, 2008. "Revisiting economic growth in Colombia. A microeconomic perspective," Working Papers Series. Documentos de Trabajo 009137, Fedesarrollo.
    3. Driouchi, Ahmed & Zouag, Nada, 2010. "Internal Mobility and Likelihood of Skill Losses in Localities of Emigration: Theory and Preliminary Empirical Application to Some Developing Economies," MPRA Paper 21799, University Library of Munich, Germany, revised 01 Apr 2010.
    4. Kendrick, Neil, 2013. "Educação para todos –“free to those who can afford it”: human capital and inequality persistence in 21st c Brazil," Economic History Working Papers 50970, London School of Economics and Political Science, Department of Economic History.
    5. Tran, Tuyen Quang & Hung Pham, Hiep & Thi Vo, Hoa & Thuy Luu, Hong & Mai Nguyen, Huong, 2019. "Local governance, education and occupation-education mismatch: Heterogeneous effects on wages in a lower middle income economy," International Journal of Educational Development, Elsevier, vol. 71(C).
    6. Marcela Meléndez Arjona & Arturo Harker Roa, 2008. "Revisiting economic growth in Colombia. A microeconomic perspective," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 009137, FEDESARROLLO.
    7. Gonzalez, Naihobe & Oyelere, Ruth Uwaifo, 2011. "Are returns to education on the decline in Venezuela and does Mission Sucre have a role to play?," Economics of Education Review, Elsevier, vol. 30(6), pages 1348-1369.
    8. Stefan Gravemeyer & Thomas Gries, 2010. "Income and disparity in Germany and China," Working Papers CIE 30, Paderborn University, CIE Center for International Economics.
    9. Rodrigo Azuero & David Zarruk Valencia, 2016. "The Effects of Student Loans on the Provision and Demand for Higher Education," PIER Working Paper Archive 17-020, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 22 Oct 2017.
    10. Oliver Morrissey & Susan Namirembe Kavuma & Richard Upward, 2015. "Private returns to education for wage-employees and the self-employed in Uganda," WIDER Working Paper Series 021, World Institute for Development Economic Research (UNU-WIDER).
    11. Simona Grassi & Ching-to Ma, 2010. "Subsidy design: wealth versus benefits," Journal of Economics, Springer, vol. 101(1), pages 49-72, September.
    12. Le Wang, 2013. "How Does Education Affect the Earnings Distribution in Urban China?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(3), pages 435-454, June.
    13. Barry Bosworth & Susan M. Collins & Arvind Virmani, 2006. "Sources of Growth in the Indian Economy," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 3(1), pages 1-69.
    14. Ian Coxhead & Rashesh Shrestha, 2016. "Could a Resource Export Boom Reduce Workers’ Earnings? The Labour-Market Channel in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 52(2), pages 185-208, May.
    15. Diego Azqueta Oyarzun & Guillermina Gavaldon, 2014. "The economic assessment of education: Social Efficiency or Social Reconstruction?," Investigaciones de Economía de la Educación volume 9, in: Adela García Aracil & Isabel Neira Gómez (ed.), Investigaciones de Economía de la Educación 9, edition 1, volume 9, chapter 51, pages 969-978, Asociación de Economía de la Educación.
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    More about this item

    Keywords

    Access&Equity in Basic Education; Education For All; Teaching and Learning; Primary Education; Education and Society; Economics of Education;
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