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School Repetition, Dropouts, and the Rates of Return to Schooling: The Case of Indonesia

Jere Behrman and Anil Deolalikar ()

Oxford Bulletin of Economics and Statistics, 1991, vol. 53, issue 4, 467-80

Abstract: Standard Estimates of the rates of return to primary schooling in most developing countries are high, and have been used to support advocacy of increased investments in primary schooling. But the standard estimates ignore repetition and dropout experience. This paper develops a procedure for estimating the impact of repetition and dropout rates and applies it to Indonesian data. The results are striking, suggesting that standard procedures overstate substantially the economic returns to schooling in Indonesia (eg. by 38 to 78 percent for primary schooling), distort the pattern of estimated returns across schooling levels by overestimating especially the returns to the lower schooling levels, and misrepresent the relative returns to schooling investments among groups identified by sex, rural-urban residence, and age. Copyright 1991 by Blackwell Publishing Ltd

Date: 1991
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