Returns to Education in Developing Countries

Evidence from the Living Standards and Measurement Study Surveys

Published in: Economics of Education Review, v. 49, Dec. 2015, p. 69-90

Posted on RAND.org on November 18, 2015

by Evan D. Peet, Gunther Fink, Wafaie Fawzi

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We use 61 nationally representative household surveys from 25 developing countries between 1985 and 2012 to assess whether returns to education are systematically higher in developing countries, and to investigate whether recent increases in access to human and physical capital have altered returns. We find no evidence of systematic "excess returns" in developing countries, and estimate an average return to schooling in the represented countries of 7.6%. We also do not find evidence of systematic changes in returns over the past two decades. Overall, returns appear highly heterogeneous, with lower returns in rural areas, higher returns for females than males, and higher returns in the regions of Africa and Latin American than in Asia and Eastern Europe.

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