Returns to basic skills in central and eastern Europe

Abstract

This article uses semi-parametric econometric techniques to investigate the relationship between basic skills and earnings in three post-communist countries: the Czech Republic, Hungary and Slovenia, using the International Adult Literacy Survey dataset. It finds that including a measure of basic skills in a Mincer model reduces the returns to education. In addition, using a partially linear model, in which log earnings is linear in education but is an arbitrary function of basic skills, it finds that this relationship is not well described by the common assumption of linearity at the tails of the distribution. Copyright (c) 2010 The Authors. Journal compilation (c) 2010 The European Bank for Reconstruction and Development.

Returns to education in Central and Eastern European transition economies: The role of macroeconomic context

“…Czechia: Chase (1998); Flanagan (1998); Newell and Reilly (1999); Filer et al (1999); Vecernik (2001); Jurajda (2003); Flabbi et al (2008); Hanushek and Zhang (2009); Denny and Doyle (2010); Montenegro and Patrinos (2014); Hanushek et al (2015); Münich, Svejnar, and Terrell (2005a); Münich, Svejnar, and Terrell (2005b).…”

“…Hungary: Newell and Reilly (1999); Campos and Jolliffe (2007); Flabbi et al (2008); Hanushek and Zhang (2009); Denny and Doyle (2010); Montenegro and Patrinos (2014).…”

“…Slovenia: Orazem and Vodopivec (1995); Stanovnik (1997); Flabbi et al (2008); Denny and Doyle (2010); Montenegro and Patrinos (2014).…”

Lost in transition?

“…They argue that this evidence strongly contradicts the hypothesis that human capital acquired under communism is less appropriate for a market economy. Denny and Doyle (2010) estimate returns to formal education in the Czech Republic, Hungary and Slovenia in the mid nineties on a sample of workers educated mainly under communism. They find that their estimates are not influenced by the inclusion of IALS test scores, that are measures of 'functional literacy', among the controls.…”

Do Literacy and Numeracy Pay Off? On the Relationship between Basic Skills and Earnings

“…One of the few studies on non-Anglo-Saxon countries is by Denny and Doyle (2010) who use the 1998 IALS components for the Czech Republic, Hungary, and Slovenia. The authors employ semi-parametric econometric techniques and find that returns to basic skills are significant in Slovenia and the Czech Repulic, but to a lesser extent in Hungary.…”