Returns to education in Russia: Nowhere below?

Abstract

The paper presents a wide set of estimates for returns to education in Russia, introducing a number of new sources of microdata that previosly remained unused by both Russian and foreign researchers. Until now virtually all available estimates for Russia were based on data from a single source — The Russia Longitudinal Monitoring Survey — Higher School of Economics (RLMS-HSE). According to these data, since the mid-2000s returns to education rapidly declined and have dropped to abnormally low levels. The paper tests the thesis of ultra-low economic value of Russian education using data from three alternative representative surveys regularly conducted by Rosstat. The analysis shows that currently returns to education in Russia reach 12—13%, which is much higher than the standard RLMS estimates. University-type tertiary education almost doubles earnings (its premium approaches to 100%), and even short-cycle tertiary education provides a premium of about 20—30%. Alternative sources also indicate that over the past 15 years, returns to education in Russia remained stable and, therefore, no decreasing trend in the economic value of education has been observed. This makes it possible to reject the currently popular thesis about abnormally low returns to education in Russia.