Returns to education among the informally employed in Thailand

Abstract

Thailand experienced rapid economic development and made significant investments in education over the past four decades; however, more than half of Thai workers remain informally employed. Despite the prevalence and persistence of informal work in Thailand, little is known about the returns to investments in formal education among informal workers. Using individual‐level data from the 2011, 2013, and 2015 Thailand Household Socio‐economic Surveys, this study estimates the wage returns to years of education for informal workers using an instrumental variable (IV) approach to correct for potentially biased coefficient estimates on years of education due to unobserved ability. Contrary to expectations, informally employed Thai workers find substantial returns to investments in formal education. The results under the IV approach indicate that the return to an additional year of education for the informally employed is 11–12 per cent, compared to almost 15 per cent for formally employed private firm workers.

Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers

“…The return on tertiary education gradually decreased along with the return on basic education during the 2007-2012 period but slightly increased in 2017. The magnitude and sign of the estimated coefficients for the effects of education and gender are comparable to those in the existing literature (Tangtipongkul 2015;Vivatsurakit and Vechbanyongratana 2020;Warunsiri and McNown 2010). The decreasing return on education was similarly reported by Tangtipongkul (2015).…”