Return to education and labor market in Cambodia: evidence form labor force survey 2012 and CSES 2014

Abstract

This paper mainly estimates the returns to education employing the standard Mincerian function using the latest Cambodian labor force survey 2012, where the dependent variable is the natural logarithm of earnings and independent variables include years of schooling or educational attainment and potential experience. The paper also examines the effect of foreign language skills on earnings. This paper is divided into three sections. The first section examines Cambodia’s labor markets. The second section explores the econometric model, in particular, Mincerian function to estimate returns to education using the latest labor force survey conducted in 2012. We find that for employed persons with an educational level lower than or equal to grade 12 it is about 3.3 percent; but it is higher for males. The annualized rate of return to education for undergraduate level was approximately 17 percent. Regarding language skill, we find that people who hold a bachelor degree and can speak English can earn more than those who can speak only Khmer language. There is also a significant wage gap between bachelor holders and high school certificate holders at a ratio of 1.9.