Earnings, Schooling, and Economic Reform

Earnings, Schooling, and Economic Reform: Econometric Evidence From Hungary (1986 2004) Nauro Campos and Dean Jolliffe How does the relationship between earnings and schooling change with the introduction of comprehensive economic reform? This article sheds light on this question using a unique data...

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Main Authors:	Campos, Nauro, Jolliffe, Dean
Format:	Journal Article
Published:	World Bank 2012
Subjects:	labor force labor market labor market experience labor market reform labor markets Labour public services vocational education wage compression younger workers
Online Access:	http://hdl.handle.net/10986/4468

id	okr-10986-4468
recordtype	oai_dc
spelling	okr-10986-44682021-04-23T14:02:18Z Earnings, Schooling, and Economic Reform Campos, Nauro Jolliffe, Dean labor force labor market labor market experience labor market reform labor markets Labour public services vocational education wage compression younger workers Earnings, Schooling, and Economic Reform: Econometric Evidence From Hungary (1986 2004) Nauro Campos and Dean Jolliffe How does the relationship between earnings and schooling change with the introduction of comprehensive economic reform? This article sheds light on this question using a unique data set and procedure to reduce sample-selection bias. The principal assumptions are that sample-selection bias was minimal in 1986 and that the decision to participate in the wage market after 1986 is correlated with age, gender, and schooling demographics. Once corrected for sample selection on observables, the increase in returns is smaller, suggesting the existence of the positive correlation between education and the decision to participate in the wage sector that was discussed above. 16 Comparing the panels shows that sample-selection bias is positive and quite large throughout the period of analysis. An advantage of the Wage and Earnings Survey design is that the sample was selected in a single stage, and thus there is no need to correct estimates of the sampling variance for any design-induced dependence. Returns to Years of Schooling, 1986 2004: Spatial and Industry Fixed-effects Estimation of Equation (1) 1986 Panel A: Selection-corrected estimates Years of schooling Gender dummy variable (male 1) Potential experience Experience squared/100 Firm size dummy (300 employees 1) Number of observations R2 Panel B: Uncorrected estimates Years of schooling Gender dummy variable (male 1) Potential experience Experience squared/100 Firm size: 300 employees Number of observations R2 1989 1992 1995 1998 Although the Wage and Earnings Survey data include no direct measures of school quality, it is possible to provide limited supporting evidence. Studies that are based on multiple survey instruments for temporal analysis face the difficult question of whether the observed change results from changes in the examined population or changes in the survey instrument. The analysis showed that the 75 percent increase in returns to a year of schooling between 1986 and 2004 is evidence that the planned economy Campos and Jolliffe 525 undervalued education and that liberalization has allowed markets to correct this. 2012-03-30T07:12:36Z 2012-03-30T07:12:36Z 2007-09-30 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/4468 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank World Bank Journal Article Europe and Central Asia Hungary
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
topic	labor force labor market labor market experience labor market reform labor markets Labour public services vocational education wage compression younger workers
spellingShingle	labor force labor market labor market experience labor market reform labor markets Labour public services vocational education wage compression younger workers Campos, Nauro Jolliffe, Dean Earnings, Schooling, and Economic Reform
geographic_facet	Europe and Central Asia Hungary
description	Earnings, Schooling, and Economic Reform: Econometric Evidence From Hungary (1986 2004) Nauro Campos and Dean Jolliffe How does the relationship between earnings and schooling change with the introduction of comprehensive economic reform? This article sheds light on this question using a unique data set and procedure to reduce sample-selection bias. The principal assumptions are that sample-selection bias was minimal in 1986 and that the decision to participate in the wage market after 1986 is correlated with age, gender, and schooling demographics. Once corrected for sample selection on observables, the increase in returns is smaller, suggesting the existence of the positive correlation between education and the decision to participate in the wage sector that was discussed above. 16 Comparing the panels shows that sample-selection bias is positive and quite large throughout the period of analysis. An advantage of the Wage and Earnings Survey design is that the sample was selected in a single stage, and thus there is no need to correct estimates of the sampling variance for any design-induced dependence. Returns to Years of Schooling, 1986 2004: Spatial and Industry Fixed-effects Estimation of Equation (1) 1986 Panel A: Selection-corrected estimates Years of schooling Gender dummy variable (male 1) Potential experience Experience squared/100 Firm size dummy (300 employees 1) Number of observations R2 Panel B: Uncorrected estimates Years of schooling Gender dummy variable (male 1) Potential experience Experience squared/100 Firm size: 300 employees Number of observations R2 1989 1992 1995 1998 Although the Wage and Earnings Survey data include no direct measures of school quality, it is possible to provide limited supporting evidence. Studies that are based on multiple survey instruments for temporal analysis face the difficult question of whether the observed change results from changes in the examined population or changes in the survey instrument. The analysis showed that the 75 percent increase in returns to a year of schooling between 1986 and 2004 is evidence that the planned economy Campos and Jolliffe 525 undervalued education and that liberalization has allowed markets to correct this.
format	Journal Article
author	Campos, Nauro Jolliffe, Dean
author_facet	Campos, Nauro Jolliffe, Dean
author_sort	Campos, Nauro
title	Earnings, Schooling, and Economic Reform
title_short	Earnings, Schooling, and Economic Reform
title_full	Earnings, Schooling, and Economic Reform
title_fullStr	Earnings, Schooling, and Economic Reform
title_full_unstemmed	Earnings, Schooling, and Economic Reform
title_sort	earnings, schooling, and economic reform
publisher	World Bank
publishDate	2012
url	http://hdl.handle.net/10986/4468
_version_	1764391496940781568

Earnings, Schooling, and Economic Reform

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