Returns to Human Capital in Transitional Russia

Abstract

This paper applies parametric and nonparametric techniques to the most recent data from the Russian Longitudinal Monitoring Survey (RLMS) 1992-2000 and shows the returns to schooling increased over the course of transition, overall and for attainment cohorts neither at the top nor bottom of the schooling ladder. The collapse in earnings is focused on people with graduate degrees. Returns to schooling are higher for women; but this gain is more than offset by the large gender wage gap. The gender wage differential increased over the years especially for younger women and women without higher education; there is evidence of increased discrimination. Return to experience increased and remained higher for women than for men. The age-earnings profile for men became more compressed, favoring the young with respect to the old; whereas the opposite took place for women, whose earnings peak became steeper at the middle age. Comparing to the estimates from the U.S. Current Population Survey 1992-2000, the returns to schooling are still lower in Russia; while the returns to experience are higher, especially for women, and the gender wage differential is now more than twice as large in Russia than in the U.S.

Keywords: Human capital, Russian transitional economy, returns to education, wage regression

JEL Classification: P2, J0, J1, J3, J7