Returns to Schooling around the World
Rates of return to investments in schooling have been estimated since the late 1950s. In the 60-plus year history of such estimates there have been several attempts to synthesize the empirical results in order to ascertain patterns. This paper presents unified estimates of the latest available surveys and patterns using the same specification and estimation procedure and data from 131 economies and 545 harmonized household surveys. This effort to compile comparable estimates addresses issues in the literature, such as: (i) the definition of the dependent variable; (ii) the variables used as controls; (iii) sample definitions; and (iv) the estimation method. The study holds constant the definition of the dependent variable, the set of control variables, the sample definition, and the estimation method for all the surveys in the sample. The results show: (i) private rates of return to schooling across a range of countries are more concentrated around the mean than previously thought; (ii) the basic model used is more stable than one may have expected; and (iii) private returns are higher/lower in the higher/lower schooling levels.
Montenegro, C.E.; Patrinos, H.A. Returns to Schooling around the World. (2012) 24 pp. [Background Paper for the World Development Report 2013]