Low Wage Returns to Schooling in a Developing Country: Evidence from a Major Policy Reform in Turkey

50 Pages Posted: 4 Sep 2015

See all articles by Abdurrahman Aydemir

Abdurrahman Aydemir

Sabanci University

Murat G. Kïrdar

Middle East Technical University (METU) - Department of Economics; Bogazici University - Department of Economics

Abstract

In this paper, we estimate the returns on 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. We estimate that among 18- to 26-year-olds, the return from an extra year of schooling is almost zero for men and 3.8 percent for women. The low level of these estimates contrasts starkly with those estimated for other developing countries. We identify several reasons why the returns on schooling are low 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 we estimate puts a higher weight on the causal effect of schooling at higher grade levels for women than for men.

Keywords: returns to education, compulsory schooling laws, wages, gender

JEL Classification: J18, J31, I21, I28

Suggested Citation

Aydemir, Abdurrahman and Kirdar, Murat G., Low Wage Returns to Schooling in a Developing Country: Evidence from a Major Policy Reform in Turkey. IZA Discussion Paper No. 9274, Available at SSRN: https://ssrn.com/abstract=2655314 or http://dx.doi.org/10.2139/ssrn.2655314

Abdurrahman Aydemir (Contact Author)

Sabanci University ( email )

Orta Mahalle Üniversite Caddesi 27
Istanbul, Orhanli, 34956 Tuzla 34956
Turkey

Murat G. Kirdar

Middle East Technical University (METU) - Department of Economics ( email )

Inonu Bulvari
Ankara
Turkey

Bogazici University - Department of Economics ( email )

Natuk Birkan Building
Bebek
Istanbul, 34342
Turkey

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