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Revisiting the Returns to Education in Thailand: A Regression Discontinuity Approach

Nobuhiko Fuwa and Upalat Korwatanasakul

No 284851, 2017 ASAE 9th International Conference, January 11-13, Bangkok, Thailand from Asian Society of Agricultural Economists (ASAE)

Abstract: This paper estimates returns to schooling in Thailand using a regression discontinuity approach applied to the change in compulsory schooling law in 1978. We find that the compulsory schooling law played a role in enhancing human capital investment in the eve of the rapid structural transformation in the 1980s, that the returns to schooling based on our IV estimation was round eight percent, while OLS somewhat overestimates (by 20%) such returns, and that returns were higher in urban areas, in services (than in agricultural) sectors and, surprisingly, in underdeveloped Northern regions. Our findings are in sharp contrast with most of the recent studies exploiting similar institutional changes from developed countries, where OLS estimates tend to under-estimate returns to schooling with the implication that those school drop-outs (whose behavior is altered by compulsory schooling) tend to have higher returns than those already in school even before the law change. The conventional notion of ‘ability bias’ (which we confirm) are more likely to arise in developing (but not so much in developed) countries possibly because parents could be forced to keep only those (among many) of their children with higher ability in school, thereby reinforcing (rather than compensating) inequality among children within the household.

Keywords: Public; Economics (search for similar items in EconPapers)
Date: 2017-01
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