Abstract
This paper estimates private and social returns to investment in education in Turkey, using the 2017 Household Labor Force Survey and alternative methodologies. The analysis uses the 1997 education reform of increasing compulsory education by three years as an instrument. This results in a private rate of return on the order of 16 percent for higher education and a social return of 10 percent. Using the number of children younger than age 15 in the household as an exclusion restriction, the analysis finds that returns to education for females are higher than those for males. Contrary to many findings in other countries, private returns to those working in the public sector are higher than those in the private sector, and private returns to those who followed the vocational track in secondary education are higher than those in the general academic track. The paper discusses the policy implications of the findings.
Highlights
Since the advent of human capital theory in economic thought, estimating the returns to investment in education has been a very popular subject among researchers.Yet, most of the recent estimates in this proliferating literature have several limitations: Conceptually, the authors rarely make a distinction between private and social returns, typically estimating only private returns – often not even using the word private in their papers.Methodologically, the estimates are done by what we describe as the easy-way; that is, by using the convenient Mincerian earnings function rather than the full-discounting method.Policy-wise, invalid recommendations are made based on private returns.Anne Krueger (1972) estimated a very high return to education including higher education using data for Turkey from 1968
While Turkey has had the highest growth in the respective region in recent years and aspires to become a high-income economy in the decade, the country has witnessed a slowdown in economic growth since 2011, as private investment and productivity stagnated
Productivity dynamics deserve attention from researchers and policy makers searching for reasons for the growth slowdown and ways to reverse it (World Bank 2016)
Summary
Since the advent of human capital theory in economic thought, estimating the returns to investment in education has been a very popular subject among researchers (see Psacharopoulos and Patrinos 2018 for a recent review on the subject).Yet, most of the recent estimates in this proliferating literature have several limitations: Conceptually, the authors rarely make a distinction between private and social returns, typically estimating only private returns – often not even using the word private in their papers.Methodologically, the estimates are done by what we describe as the easy-way; that is, by using the convenient Mincerian earnings function rather than the full-discounting method.Policy-wise, invalid recommendations are made based on private returns.Anne Krueger (1972) estimated a very high return to education including higher education using data for Turkey from 1968. Since the advent of human capital theory in economic thought, estimating the returns to investment in education has been a very popular subject among researchers (see Psacharopoulos and Patrinos 2018 for a recent review on the subject). Policy-wise, invalid recommendations are made based on private returns. Anne Krueger (1972) estimated a very high return to education including higher education using data for Turkey from 1968. She used those estimates to explain the high demand for higher education at the time. The purpose of this paper is to estimate private and social returns to investment in education based on different methodologies using data from the Turkish 2017 Household Labor Force Survey (HLFS)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
