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Private Returns to Human Capital over Transition: A Case Study of Belarus

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  • Pastore, Francesco

    (Università della Campania Luigi Vanvitelli)

  • Verashchagina, Alina

    (Marche Polytechnic University)

Abstract

The gradualist approach to economic transition in Belarus would contribute to form the a priori expectation that the rate of return to education is low and the earnings profile by work experience flat, like they supposedly were under central-planning. However, the first available estimates of Mincerian earnings equations based on the Belarusian Household Survey on Incomes and Expenditure suggest that the skill payoff was high in 1996, at about 10.1% per year, and stable. The return to one year of work experience is also high at 5%. This result maintains also after controlling for sample selection bias, despite a general reduction in the annual rate of return to education by about 20-30%. Though, it is ambiguous whether the high-skill payoff is the consequence of market forces coming into play or of policy decisions, considering the pervasive role of the state in the process of wage determination.

Suggested Citation

  • Pastore, Francesco & Verashchagina, Alina, 2004. "Private Returns to Human Capital over Transition: A Case Study of Belarus," IZA Discussion Papers 1409, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1409
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    More about this item

    Keywords

    educational economics; returns to human capital; economic transition; Belarus;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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