Low wage returns to schooling in a developing country: evidence from a major policy reform in Turkey
Aydemir, Abdurrahman Bekir and Kırdar, Murat G. (2017) Low wage returns to schooling in a developing country: evidence from a major policy reform in Turkey. Oxford Bulletin of Economics and Statistics . ISSN 0305-9049 (Print) 1468-0084 (Online) Published Online First http://dx.doi.org/10.1111/obes.12174
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Official URL: http://dx.doi.org/10.1111/obes.12174
In this paper, we estimate returns to schooling for young men and women in Turkey using the exogenous and substantial variation in schooling across birth cohorts brought about by the 1997 reform of compulsory schooling within a fuzzy regression discontinuity design. We estimate that the return from an extra year of schooling is about 7-8% for women and an imprecisely estimated 2-2.5% for men. The low level of the estimates for men contrasts starkly with those estimated for other developing countries. We identify several reasons why returns to schooling are low for men and why they are higher for women in our context. In particular, the policy alters the schooling distributions of men and women differently, thus the average causal effect puts a higher weight on the causal effect of schooling at higher grade levels for women than for men.
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