The returns to university education in Turkey by disciplines

Official URL: http://risc01.sabanciuniv.edu/record=b1500470 (Table of Contents)

Turkey is expanding higher education rapidly, more than doubling the number of universities in the last six years. The Ministry of Development's goals are to expand access to university, while ensuring that higher education is sensitive to the labor market, and to the need for graduates in health and education are met. But the wage distribution shows inequality among Turkey's most highly skilled, suggesting the rewards for different majors may vary. However, until now no evidence existed on the labor market conditions facing graduates from different disciplines in Turkey. This study uses the labor force surveys to calculate the wage returns for different college fields of study. Employing ordinary least squares regression and a Heckman procedure to correct for selection bias, I find that while the average return to a university degree is 32% over a high school degree, this masks significant heterogeneity. Relative to an arts degree, health majors have a 40% markup, engineering, services, and social science/business/law are each between 12 and 14%, and an education degree has no significant premium. This evidence supports raising university fees for high-return majors, particularly health, in order to increase revenues for both those programs and to subsidize low-return programs like education. Disciplines like arts and humanities need to be more sensitive to the labor market. Making targeted investments in education based on evidence will remedy inequality among the highly skilled, improving welfare and economic growth.