Returns to education in India: Capturing the heterogeneity

Abstract

AbstractThe aim of this article is to estimate the marginal rates of return to various levels of education in India, across the entire wage distribution. For this purpose, unit level data from the 68th round of the National Sample Survey Organisation (India) for the year 2011–2012 have been used, and the technique of quantile regression has been applied. Average estimates were ignored, and the heterogeneity in rates of return was captured across the following disaggregations: (a) all India, public and private sectors, (b) gender, and caste groups (scheduled tribes [STs], scheduled castes [SCs], other backward classes, and others). The findings showcase that the rates of return increased with consecutive higher levels of education. However, this impact varies across the disaggregations examined. The returns are the least for STs and SCs as compared with others (the unreserved category), with the differences in the rates of return being maximum in the private sector. Additionally, women experience a higher rate of return than men. These findings have important policy implications with respect to strengthening the public funding of higher education and encouraging participation from the marginalised segments (STs, SCs), which is otherwise dismal.