Low Wage Returns to Schooling in a Developing Country: Evidence from a Major Policy Reform in Turkey

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S Low Wage Returns to Schooling in a DevelopingIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. In this paper, we estimate the returns on schooling for young men and women in Turkey using the exogenous and substantial variation in schooling across birth-cohorts brought about by the 1997 reform of compulsory schooling. We estimate that among 18-to 26-yearolds, the return from an extra year of schooling is almost zero for men and 3.8 percent for women. The low level of these estimates contrasts starkly with those estimated for other developing countries. We identify several reasons why the returns on schooling are low and why they are higher for women in our context. In particular, the policy alters the schooling distributions of men and women differently, thus the average causal effect we estimate puts a higher weight on the causal effect of schooling at higher grade levels for women than for men.JEL Classification: J18, J31, I21, I28

Returns to Investment in Education: The Case of Turkey

“…Overall, the reform produced a significantly lower return to schooling for men. This is consistent with a previous study using the same reform, but a different identification study based on an earlier survey (Aydemir and Kirdar 2017). They find that the return from an extra year of schooling is about 8 percent for women and no more than 2.5 percent for men.…”

“…However, Pischke and von Wachter's (2008) results for Germany have been challenged by Cygan-Rehm (2018) who finds that a 1960s compulsory schooling reform had positive effects on earnings in Germany. The low level of the estimates for men is explained by low attainment overall, while the much higher returns for women are because women were more likely to complete high school because of the reform (Aydemir and Kirdar 2017) and move into higher skill and formal sector jobs (Torun 2018).…”

The Causal Effect of Education on Health Behaviors: Evidence from Turkey

“…For the latter group information is collected on self-assessed health, health behaviors, chronic diseases, weight and height as well as education level, demographic characteristics such as age, gender, marital status, rural/urban region, labor market status and 1 There are several studies that use the 1997 change in compulsory schooling laws in Turkey as instrument. For instance, Aydemir and Kırdar (2013) use this instrument to examine the relationship between years of schooling and earnings. Kırdar et al (2012) examine the impact of the raise in compulsory schooling years on teenage marriage and births.…”

The evolution of returns to education in the Middle East and North Africa: Evidence from comparable education policy changes in Tunisia

“…My results contribute to the small but growing literature on causal estimates of returns to education in the MENA region. Pekkarinen and Pellicer (2013), Aydemir and Kirdar (2017) and Assaad, Aydemir, Dayioglu Tayfur, and Kirdar (2016) focus on the education-labor market nexus in the MENA, whereas Lavy and Zablotsky (2015) and Gulesci and Meyersson (2014) focus specifically on female outcomes such as fertility and female religiosity, respectively. Pekkarinen and Pellicer (2013) find strong returns to education in terms of public employment for older cohorts in Tunisia, whereas Aydemir and Kirdar (2017) and Assaad et al (2016) find low wage returns to education for youth in Turkey and Egypt, respectively.…”

“…As educational attainment increases, the pool of educated individuals becomes less privileged and selection bias ought to become lower. There are several articles that have estimated causal returns to education in developing countries using school expansions or education reforms (see for instance, Duflo et al (2001), Fang, Eggleston, Rizzo, Rozelle, and Zeckhauser (2012), Ozier (2016) and Aydemir and Kirdar (2017)). But estimates are still too few and differ too widely between studies to infer general conclusions.…”