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Rates of Returns to Human Capital Investments in Albania

Author

Listed:
  • Arsena Gjipali

    (Tirana University,Albania)

  • Suela Kristo

    (Tirana University,Albania)

Abstract

This paper develops a comprehensive framework of the main hypothesis tested whether the private returns to investment in education in Albania are sufficient to provide economic incentives for a high participation rate in post-compulsory schooling. We use cross section data from the Living Standards Measurement Survey (LSMS) of 2002 and develop a comprehensive framework for our quantitative analysis of the private returns to schooling and private incentives to invest in education. We construct estimates of the private return to each postcompulsory schooling level, taking into account the effects of education on wages. Evidence from the data shows that the significant part of return to secondary education is linked to further returns to higher education. This finding might explain the reduced incentives to invest in additional human capital.

Suggested Citation

  • Arsena Gjipali & Suela Kristo, 2011. "Rates of Returns to Human Capital Investments in Albania," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 14(41), pages 3-24, September.
    • Handle: RePEc:rej:journl:v:14:y:2011:i:41:p:3-24
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    References listed on IDEAS

    as
    1. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Human Capital and Rates of Return," Chapters, in: Geraint Johnes & Jill Johnes (ed.), International Handbook on the Economics of Education, chapter 1, Edward Elgar Publishing.
    2. Angel de la Fuente & Juan Francisco Jimeno, 2004. "The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU," Working Papers 152, Barcelona School of Economics.
    3. Andrew Weiss, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-154, Fall.
    4. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, April.
    5. Geraint Johnes & Jill Johnes (ed.), 2004. "International Handbook on the Economics of Education," Books, Edward Elgar Publishing, number 2847.
    Full references (including those not matched with items on IDEAS)

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