Returns to schooling in Kazakhstan

G. Reza Arabsheibani and Altay Mussurov

The Economics of Transition, 2007, vol. 15, issue 2, pages 341-364

Abstract: This paper examines rates of return to schooling in Kazakhstan using OLS (Ordinary Least Squares) and instrumental variable (IV) methodologies. We use spouse's education and smoking as instruments. We find that spouse's education is a valid instrument and that conventional OLS estimates that assume the exogenous nature of schooling, and hence do not control for endogeneity bias, may underestimate the true rates of return. The results indicate that the returns to schooling in Kazakhstan have increased with transition. This may reflect the relative scarcities of highly educated people in Kazakhstan with human capital that employers require and, following the market reforms, reward accordingly. Copyright (c) 2007 The Authors
Journal compilation (c) 2007 The European Bank for Reconstruction and Development .

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