Economic Freedom, Human Rights, and the Returns to Human Capital: An Evaluation of the Schultz Hypothesis

Elizabeth King, Claudio Montenegro and Peter Orazem

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: Hundreds of studies measure the private returns to schooling, most focusing on a single country or a subset of countries. Following Mincer (1974), inference on returns to schooling and work experience are derived from the regression coefficients of log earnings on years of schooling and quadratic terms in age. Due mainly to George Psacharopolous and his colleagues (Psacharopoulos 1973, 1994; Psacharopoulos and Patrinos 2004), we have compilations of estimated returns to schooling across many countries. These estimates show remarkable consistencies. Despite differences in estimation methods, specifications, and level of economic development, virtually all studies show that earnings rise with years of schooling and increase at a declining rate in age or work experience.1 In almost all data sets, the largest percentage annual wage gains are captured by the youngest workers. The wage gain from additional experience gets smaller and may even turn negative with age.

Date: 2012-10-01
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Related works:
Journal Article: Economic Freedom, Human Rights, and the Returns to Human Capital: An Evaluation of the Schultz Hypothesis (2012)
Working Paper: Economic Freedom, Human Rights, and the Returns to Human Capital: An Evaluation of the Schultz Hypothesis (2010)
Working Paper: Economic Freedom, Human Rights, and the Returns to Human Capital: An Evaluation of the Schultz Hypothesis (2010)
Working Paper: Economic freedom, human rights, and the returns to human capital: an evaluation of the Schultz hypothesis (2010)
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