Beyond the Mincer Equation: The Internal Rate of Return to Higher Education in Colombia

Documentos de Trabajo; Facultad de Economía, Universidad del Rosario, No. 68

19 Pages Posted: 5 Nov 2009

See all articles by Andres F. Garcia

Andres F. Garcia

affiliation not provided to SSRN

Juan Carlos Guataqui

Universidad del Rosario

Dario Maldonado

Universidad del Rosario - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

José-Alberto Guerra

Universidad de los Andes, Colombia - Department of Economics

Date Written: August 13, 2009

Abstract

In order to present an estimation of the Internal Rate of Return (IRR) to higher education in Colombia we take advantage of the methodological approach provided by Heckman, Lochner and Todd (2005). Trying to overcome the criticism that surrounds interpretations of the education coefficient of Mincer equations as being the rate of return to investments in education we develop a more structured approach of estimation, which controls for selection bias, includes more accurate measures of labor income and the role of education costs and income taxes. Our results implied a lower rate of return than the ones found in the Colombian literature and show that the Internal Rate of Return for higher education in Colombia lies somewhere between 0.074 and 0.128. The results vary according to the year analyzed and individual’s gender. This last result reinforces considerations regarding gender discrimination in the Colombian labor market.

Keywords: education returns, Mincer Equation, internal rate of return, Colombia

JEL Classification: I28, J11, J31

Suggested Citation

Garcia, Andres F. and Guataqui, Juan Carlos and Maldonado, Dario and Guerra, José Alberto, Beyond the Mincer Equation: The Internal Rate of Return to Higher Education in Colombia (August 13, 2009). Documentos de Trabajo; Facultad de Economía, Universidad del Rosario, No. 68. Available at SSRN: https://ssrn.com/abstract=1500333 or http://dx.doi.org/10.2139/ssrn.1500333

Andres F. Garcia (Contact Author)

affiliation not provided to SSRN ( email )

Juan Carlos Guataqui

Universidad del Rosario ( email )

Casa Pedro Fermín
Calle 14 # 4-69
Bogota
Colombia

Dario Maldonado

Universidad del Rosario - Department of Economics ( email )

Casa Pedro Fermín
Calle 14 # 4-69
Bogota
Colombia

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

José Alberto Guerra

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

HOME PAGE: http://jguerraforero.wixsite.com/joseaguerra

Register to save articles to
your library

Register

Paper statistics

Downloads
112
rank
231,231
Abstract Views
777
PlumX Metrics