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Education quality and returns to schooling: evidence from migrants in Brazil

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  • Brotherhood, Luiz Mário Martins
  • Ferreira, Pedro Cavalcanti
  • Santos, Cézar Augusto Ramos

Abstract

We provide a new education quality index for states within a developing country using 2010 Brazilian data. This measure is constructed based on the notion that the financial returns obtained from an additional year of schooling can be seen as being derived from the value that market forces assign to this education. We use migrant data to estimate returns to schooling of individuals who studied in different states but who work in the same labor market. We find very heterogeneous educational qualities across states: the poorest Brazilian region presents education quality levels that are approximately equal to one-third of the average of all other regions, a gap three times larger than the one suggested by standardized test scores. We compare our index with standardized test scores, educational outcome variables, and public expenditure per schooling stage at the state level, producing new evidence related to education in a large developing country. We conduct an education quality-adjusted development accounting exercise for Brazilian states and find that human capital accounts for 26%-31% of output per worker differences. Adjusting for quality increases human capital’s explanatory power by 60%.

Suggested Citation

  • Brotherhood, Luiz Mário Martins & Ferreira, Pedro Cavalcanti & Santos, Cézar Augusto Ramos, 2017. "Education quality and returns to schooling: evidence from migrants in Brazil," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 782, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
  • Handle: RePEc:fgv:epgewp:782
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    Cited by:

    1. Ricardo Nogales & Pamela Córdova & Manuel Urquidi, 2020. "The impact of university reputation on employment opportunities: Experimental evidence from Bolivia," The Economic and Labour Relations Review, , vol. 31(4), pages 524-542, December.
    2. Campbell, Susanna G. & Üngör, Murat, 2020. "Revisiting human capital and aggregate income differences," Economic Modelling, Elsevier, vol. 91(C), pages 43-64.
    3. Tan, Weiqiang & Xie, Chenxin & Ye, Dezhu, 2024. "Do urban educational resources affect corporate labor costs?," Economic Modelling, Elsevier, vol. 130(C).

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