The private returns to education in rural Bangladesh

This study estimates the private average rate of return (ARR) and internal rate of return (IRR) to education in rural Bangladesh. Using data from the Bangladesh Integrated Household Survey (BIHS) 2015, we estimate average returns using the Mincerian method and IRR using the full method, accounting for both the direct and indirect costs of schooling. To account for endogeneity and selection bias, we use parental education as an instrumental variable and apply the Heckman correction method. We find an average return of 18 %, an IRR of 12 % for tertiary education, 4.86 % for secondary, and 5.24 % for primary. In the agricultural sector specifically, however, returns to tertiary education are more in line with primary and secondary education.