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Estimating the return to schooling using the Mincer equation

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  • Harry Anthony Patrinos

    (World Bank and Georgetown University, USA)

Abstract

The Mincer equation—arguably the most widely used in empirical work—can be used to explain a host of economic, and even non-economic, phenomena. One such application involves explaining (and estimating) employment earnings as a function of schooling and labor market experience. The Mincer equation provides estimates of the average monetary returns of one additional year of education. This information is important for policymakers who must decide on education spending, prioritization of schooling levels, and education financing programs such as student loans.

Suggested Citation

  • Harry Anthony Patrinos, 2016. "Estimating the return to schooling using the Mincer equation," IZA World of Labor, Institute of Labor Economics (IZA), pages 278-278, July.
    • Handle: RePEc:iza:izawol:journl:y:2016:n:278
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    References listed on IDEAS

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    1. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    2. Erik Hanushek & F. Welch (ed.), 2006. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 1, number 1, June.
    3. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    4. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.
    5. Montenegro, Claudio E. & Patrinos, Harry Anthony, 2014. "Comparable estimates of returns to schooling around the world," Policy Research Working Paper Series 7020, The World Bank.
    6. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2006. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 7, pages 307-458, Elsevier.
    7. Erik Hanushek & F. Welch (ed.), 2006. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 2, number 2, June.
    8. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    9. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    10. Damon Clark & Paco Martorell, 2014. "The Signaling Value of a High School Diploma," Journal of Political Economy, University of Chicago Press, vol. 122(2), pages 282-318.
    11. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    12. Philip Oreopoulos & Uros Petronijevic, 2013. "Making College Worth It: A Review of Research on the Returns to Higher Education," NBER Working Papers 19053, National Bureau of Economic Research, Inc.
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    Cited by:

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    2. Adhitya, Dhian & Samudro, Bhimo Rizky, 2019. "The Role of Cognitive and Non-Cognitive Skills on Labour Market Outcomes in Indonesia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(1), pages 3-16.
    3. Zhimin Liu & Aftab Ahmed Memon & Woubshet Negussie & Haile Ketema, 2020. "Interpreting the Sustainable Development of Human Capital and the Sheepskin Effects in Returns to Higher Education: Empirical Evidence from Pakistan," Sustainability, MDPI, vol. 12(6), pages 1-16, March.
    4. W.A. Senathissa, 2023. "The effect of schooling, experiences, and firm size on earnings in Sri Lanka (Incorporated with the major emphasis of Mincer’s Earnings Function)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(6), pages 561-575, June.
    5. Das, Sanchita Basu & Narayanan, Badri, 2022. "ASEAN Education Cooperation: An Assessment of the Education Divide and Measuring the Potential Impact of Its Elimination," ADBI Working Papers 1300, Asian Development Bank Institute.
    6. Bharatha Prabath Parakrama Badullahewage & Shohani Upeksha Badullahewage, 2021. "Wage Difference Between Formal Sector and Informal Sector Jobs; With Special Reference to the Labour Market in Sri Lanka," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 7(3), pages 7-17, August.
    7. Yubilianto, 2020. "Return to education and financial value of investment in higher education in Indonesia," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-28, December.
    8. Cuellar, Cecilia Y. & Moreno, Jorge O., 2022. "Employment, wages, and the gender gap in Mexico: Evidence of three decades of the urban labor market," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(2).
    9. Farah Hani & Miguel Angel Santos, 2021. "Diagnosing Human Capital as a Binding Constraint to Growth: Tests, Symptoms and Prescriptions," CID Working Papers 144a, Center for International Development at Harvard University.
    10. Amrita Datta & Tanuka Endow & Balwant Singh Mehta, 2020. "Education, Caste and Women’s Work in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(2), pages 387-406, June.
    11. Ukaj MIC & Mustafa Topxhiu RAHMIJE, 2019. "The returns to investment in education: Some theoretical and empirical insights," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 193-203.
    12. Yasser Razak Hussain & Pranab Mukhopadhyay, 2023. "How Much do Education, Experience, and Social Networks Impact Earnings in India? A Panel Data Analysis Disaggregated by Class, Gender, Caste and Religion," SAGE Open, , vol. 13(4), pages 21582440231, December.
    13. Daeheon Choi & Chune Young Chung & Mira Yoon & Jason Young, 2020. "Factors in a Sustainable Labor Market: Evidence from New College Graduates’ Initial Job Placement in Korea," Sustainability, MDPI, vol. 12(6), pages 1-22, March.
    14. Harry Patrinos & Suhas Parandekar & Ekaterina Melianova & Artem Volgin, 2020. "Returns to Education in the Russian Federation," World Bank Publications - Reports 33976, The World Bank Group.
    15. Garcia Moreno,Vicente A. & Patrinos,Harry Anthony, 2020. "Returns to Education in Azerbaijan : Some New Estimates," Policy Research Working Paper Series 9117, The World Bank.
    16. Edyta Laszkiewicz, 2016. "Determinants Of Hourly Wages Inequality In Selected European Metropolises. The Results From The Multilevel Modelling," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 11(4), pages 853-869, December.
    17. Dochu, 2021. "Bhutan'S Case Of Waving Cut-Off Point For Class X Passed Prospects For Admission In Class Xi And Its Merits: A Policy Perspective!," Working papers 2021-37-09, Voice of Research.
    18. Smyth, Emer & Devlin, Anne & Bergin, Adele & McGuinness, Seamus, 2022. "A North-South comparison of education and training systems: Lessons for policy," Research Series, Economic and Social Research Institute (ESRI), number RS138.
    19. Ruiqiao Bai & Jacqueline C. K. Lam & Victor O. K. Li, 2023. "What dictates income in New York City? SHAP analysis of income estimation based on Socio-economic and Spatial Information Gaussian Processes (SSIG)," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-14, December.
    20. Daeheon Choi & Chune Young Chung & Ha Truong, 2019. "Return on Education in Two Major Vietnamese Cities," Sustainability, MDPI, vol. 11(18), pages 1-30, September.
    21. Haggai Kennedy Ochieng & Cho Yeonsung, 2021. "Political Economy of Education: Assessing Institutional and Structural Constraints to Quality and Access to Education Opportunities in Tanzania," SAGE Open, , vol. 11(3), pages 21582440211, September.

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    More about this item

    Keywords

    human capital; labor market experience; earnings; income distribution; Jacob Mincer;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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