The private returns to education in rural Bangladesh

Shamsul Arifeen Khan Mamun, Brad R. Taylor, Hong Son Nghiem, Mohammad Mafizur Rahman and Rasheda Khanam

International Journal of Educational Development, 2021, vol. 84, issue C

Abstract: This study estimates the private average rate of return (ARR) and internal rate of return (IRR) to education in rural Bangladesh. Using data from the Bangladesh Integrated Household Survey (BIHS) 2015, we estimate average returns using the Mincerian method and IRR using the full method, accounting for both the direct and indirect costs of schooling. To account for endogeneity and selection bias, we use parental education as an instrumental variable and apply the Heckman correction method. We find an average return of 18 %, an IRR of 12 % for tertiary education, 4.86 % for secondary, and 5.24 % for primary. In the agricultural sector specifically, however, returns to tertiary education are more in line with primary and secondary education.

Keywords: Return to education; Bangladesh; Human capital; Mincerian model; Instrumental variable method (search for similar items in EconPapers)
JEL-codes: I22 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:injoed:v:84:y:2021:i:c:s0738059321000778

DOI: 10.1016/j.ijedudev.2021.102424

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