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Does it pay to study abroad? Evidence from Poland

Jacek Liwiński ()

No 2016-25, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: Tertiary education has been perceived in Poland as a key determinant of success in the labour market, as clearly shown by the increase of the net enrolment ratio in tertiary education from 9.8% in 1990 up to 40.9% in 2009. However, as tertiary education becomes more and more popular, it does not signal skills as well as before. It seems that employers may treat students' participation in international exchange programs as a new signaling tool since according to them international students’ skills – both cognitive and non-cognitive – are well above the average. On the other hand, students participating in exchange programs underline a positive impact of studying abroad on their personal development, i.e. on their general skills. Thus, from a theoretical point of view we may expect a positive correlation between studying abroad and wages, which follows from both signaling theory and human capital theory. On the average, 16% of European students report a positive impact of participation in Erasmus exchange program on their incomes, but interestingly, those from the CEE countries, including Polish students, report it much more often. The aim of this paper is to determine whether studying abroad for at least one semester has an impact on wages of higher education graduates in Poland. To answer this question, an extended Mincer wage equation was estimated using OLS on the basis of data from the nationwide tracer survey of Polish graduates conducted in 2007 (Graduate Tracer Study 2007). The hourly net wage rate in the first job after graduating from a higher education institution was the dependent variable in the wage equation. In order to reduce the selection bias, a number of variables were included in the model to reflect students’ abilities and skills, as well as their previous international experience. The results of the analysis show that Polish students who completed at least one semester of studies abroad, enjoy a wage premium of 28% in their first workplace after graduation. Interestingly, this wage premium is particularly high in case of graduates with low abilities and skills and – consequently – of a low social and economic status. This may indicate that studying abroad contributes to a reduction of social inequality.

Keywords: investment in human capital; studying abroad; international exchange programs; wage premium; wage equation (search for similar items in EconPapers)
JEL-codes: I29 J24 J31 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2016
New Economics Papers: this item is included in nep-edu and nep-tra
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http://www.wne.uw.edu.pl/index.php/download_file/2963/ First version, 2016 (application/pdf)

Related works:
Journal Article: Does it pay to study abroad? Evidence from Poland (2019) Downloads
Working Paper: Does it pay to study abroad? Evidence from Poland (2017) Downloads
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