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Returns to Schooling in Russia and Ukraine: A Semiparametric Approach to Cross-Country Comparative Analysis


Yuriy Gorodnichenko


University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Klara Sabirianova Peter


University of North Carolina - Chapel Hill; Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)

September 2004

IZA Discussion Paper No. 1325

Abstract:     
This study provides the first set of estimates of the returns to schooling over an extended period in Russia and Ukraine (1985-2002). There has been an increase in returns to schooling in both countries but the increase is much bigger in Russia than in Ukraine. The intriguing question is why returns to schooling in Russia and Ukraine diverged so much over the transition period while the skill composition of employment did not. Our approach in analyzing the sources of cross-country differences in returns to schooling is to compare the Mincerian earnings functions between the two countries and then to employ decomposition techniques. Using semiparametric methods, we construct counterfactual wage distributions for university and secondary school graduates for Ukraine using the distributions of Russian characteristics, returns to characteristics, and unobservables. This allows us to decompose differences in returns to schooling between the two countries due to differences in the labor market returns (price effect), differences in unobservables (residual effect), and differences in the labor force composition (composition effect). We conclude that of these three effects the price effect makes a major contribution to the observed differences in the returns to schooling.

Number of Pages in PDF File: 39

Keywords: returns to schooling, earnings function, semiparametric approach, decomposition, counterfactual, cross-country analysis, retrospective data, transition, Russia, Ukraine

JEL Classification: C14, I20, J31, O15, O57, P50

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Date posted: October 2, 2004  

Suggested Citation

Gorodnichenko, Yuriy and Sabirianova Peter, Klara, Returns to Schooling in Russia and Ukraine: A Semiparametric Approach to Cross-Country Comparative Analysis (September 2004). IZA Discussion Paper No. 1325. Available at SSRN: http://ssrn.com/abstract=598229

Contact Information

Yuriy Gorodnichenko
University of California, Berkeley - Department of Economics ( email )
549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
HOME PAGE: http://www.econ.berkeley.edu/~ygorodni/index.htm
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Klara Sabirianova Peter (Contact Author)
University of North Carolina - Chapel Hill ( email )
Chapel Hill, NC 27599
United States
HOME PAGE: http://www.unc.edu/~kpeter
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Feedback to SSRN (Beta)


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