Returns to Schooling in Kazakhstan: Ols and Instrumental Variables Approach

35 Pages Posted: 5 Dec 2006

See all articles by G. Reza Arabsheibani

G. Reza Arabsheibani

Swansea University - School of Business and Economics; IZA Institute of Labor Economics

Altay Mussurov

Republic of Kazakhstan - Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP)

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Date Written: November 2006

Abstract

This paper examines rates of return to schooling in Kazakhstan using OLS and instrumental variable (IV) methodologies. We use spouse's education and smoking as instruments. We find that spouse's education is a valid instrument and that conventional OLS estimates that assume the exogenous nature of schooling, and hence do not control for endogeneity bias, may underestimate the true rates of return. The results indicate that the returns to schooling in Kazakhstan have increased with transition. This may reflect the relative scarcities of highly educated people in Kazakhstan with human capital that employers require and, following the market reforms, reward accordingly.

Keywords: human capital, instrumental variables, rate of return to education

JEL Classification: C13, I21, J24

Suggested Citation

Arabsheibani, G. Reza and Mussurov, Altay, Returns to Schooling in Kazakhstan: Ols and Instrumental Variables Approach (November 2006). Available at SSRN: https://ssrn.com/abstract=949178 or http://dx.doi.org/10.2139/ssrn.949178

G. Reza Arabsheibani (Contact Author)

Swansea University - School of Business and Economics ( email )

Singleton Park
Swansea, Wales SA2 8PP SA2 8PP
United Kingdom
+44 (0) 1792 513682 (Phone)
+44 (0) 1792 295872 (Fax)

IZA Institute of Labor Economics

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Bonn, D-53072
Germany

Altay Mussurov

Republic of Kazakhstan - Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP) ( email )

4 Abai Avenue
Almaty, Almaty 480100
Kazakhstan

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