Zero Returns To Higher Education: Evidence From A Natural Experiment

Abstract

Although many papers estimate returns to education, little causal evidence has been found for low- and middle-income countries. This paper estimates the causal effect of one year of university education on wages and employment in Russia. In 2011, the Bologna reform shortened the university study period by one year and reduced the content of the curricula but did not change the quality of admitted students. I exploit this reform as a natural experiment and use a difference-in-differences design. I find no adverse effect of a one-year reduction on wages and on the probability of being employed. This suggests that the reform lowered the opportunity costs of education but did not affect the accumulation of specific skills relevant for the labour market.

Keywords: difference-in-differences, returns to education, human capital, higher education, employment, wages, Bologna reform, Russia

JEL Classification: I23, I26, J24