Publication: Returns to Education in the Economic Transition: A Systematic Assessment Using Comparable Data
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Published
2008
ISSN
02727757
Date
2012-03-30
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This paper studies a sample of economies in transition to verify the assertion that returns to schooling increase as an economy transitions to a market environment. This claim has been difficult to assess in the past as the empirical evidence so far has covered only a few countries over short time periods. A number of studies find that returns to education increased from the "pre-transition" period to the "early transition" period; it is not clear what has happened to the skills premium through the late 1990s, or the period thereafter. We implement a more systematic analysis using data comparable across countries and over time to estimate returns to schooling in eight transition economies (Bulgaria, Czech Republic, Hungary, Latvia, Poland, Russia, Slovak Republic, and Slovenia). The analysis covers the early transition period up to 2002; in the case of Hungary, we capture the transition process more fully, beginning in the late 1980s. Compared to the existing literature, we also implement more comprehensive robustness checks on the estimated returns, although at best we offer only an incomplete solution to the problem of endogeneity. We find that the evidence of a rising trend in returns to schooling over the transition period is weak. There are, however, significant differences in returns across countries. These differentials have remained roughly constant over the last 15 years. We speculate on the likely institutional and structural factors underpinning these results.
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Publication Returns to Education in the Economic Transition : A Systematic Assessment Using Comparable Data(World Bank, Washington, DC, 2007-05)This paper examines the assertion that returns to schooling increase as an economy transitions to a market environment. This claim has been difficult to assess as existing empirical evidence covers only a few countries over short time periods. A number of studies find that returns to education increased from the "pre-transition" period to the "early transition" period. It is not clear what has happened to the skills premium through the late 1990s, or the period thereafter. The authors use data that are comparable across countries and over time to estimate returns to schooling in eight transition economies (Bulgaria, Czech Republic, Hungary, Latvia, Poland, Russia, Slovak Republic, and Slovenia) from the early transition period up to 2002. In the case of Hungary, they capture the transition process more fully, beginning in the late 1980s. Compared to the existing literature, they implement a more systematic analysis and perform more comprehensive robustness checks on the estimated returns, although at best they offer only an incomplete solution to the problem of endogeneity. The authors find that the evidence of a rising trend in returns to schooling over the transition period is generally weak, except in Hungary and Russia where there have been sustained and substantial increases in returns to schooling. On average, the estimated returns in the sample are comparable to advanced economy averages. There are, however, significant differences in returns across countries and these differentials have remained roughly constant over the past 15 years. They speculate on the likely institutional and structural factors underpinning these results, including incomplete transition and significant heterogeneity and offsetting developments in returns to schooling within countries.Publication Attitudes to Income Equality: The 'Socialist Legacy' Revisited(2009)It is routinely assumed that residents of post-socialist countries have a preference for greater income equality, other things being equal, owing to the legacy of socialism. This proposition is examined in the context of Eastern Europe and the former Soviet Union (FSU) using three waves of the World Values Survey. Contrary to expectations, there is little evidence of a 'socialist legacy' en bloc. Countries in the FSU as a group display significantly lower preference for moving towards greater income equality than Eastern Europe. Moreover, this preference for greater income inequality appears to have persisted at least since the mid-1990s.Publication How Does the Composition of Public Spending Matter?(World Bank, Washington, DC, 2005-03)Public spending has effects which are complex to trace and difficult to quantify. But the composition of public expenditure has become the key instrument by which development agencies seek to promote economic development. In recent years, the development assistance to heavily indebted poor countries (HIPCs) has been made conditional on increased expenditure on categories that are thought to be "pro-poor". This paper responds to the growing concern being expressed about the conceptual foundations and the empirical basis for the belief that poverty can be reduced through targeted public spending. While it is widely accepted that growth and redistribution are important sources of reduction in absolute poverty, a review of the literature confirms the lack of an appropriate theoretical framework for assessing the impact of public spending on growth as well as poverty. There is a need to combine principles of both public economics and growth theory to develop appropriate theoretical guidance for public expenditure policy. This paper identifies a number of approaches that are beginning to address this gap. Building on these approaches, it proposes a framework that has its foundation in a broadly articulated development strategy and its economic goals such as growth, equity, and poverty reduction. It recommends the use of public economics principles to clarify the roles of the private and public sectors and to recognize the complementarity of spending, taxation, and regulatory instruments available to affect public policy. With regard to the impact of any given type of public spending, policy recommendations must be tailored to countries and be based on empirical analysis that takes account of the lags and leads in their effects on equity and growth and ultimately on poverty. The paper sketches out such a framework as the first step in what will have to be a longer-term research agenda to provide theoretically and empirically robust and verifiable guidance to public spending policy.Publication The Long Term Educational Cost of War: Evidence from Landmine Contamination in Cambodia(2011)The economic impact of war may be visible in the long run and particularly through its impact on human capital. This paper uses unique district level data on landmine contamination intensity in Cambodia combined with survey data on individuals to evaluate the long-run impact of Cambodia's 30 years of war (1970-1998) on education levels and earnings. These effects are identified using difference-in-differences (DD) and instrumental variables (IV) estimators. In the DD framework I exploit two sources of variation in an individual's exposure to the conflict: age in 1970 and landmine contamination intensity in the district of residence. The IV specification uses the distance to the Thai border as an exogenous source of variation in landmine contamination intensity. The most conservative result indicates that individuals who were too young to have attended school before the start of the war received on average 0.5 less years of education. And, immediately after the war there was no visible effect on earnings. The effects are therefore overall weak. I argue that the destruction of physical capital may be what contributes to drive down the returns to education in Cambodia post-war. The estimates reported may be very conservative due to both error in our measure of conflict intensity and possible selection bias in the placement of prosperous regions.Publication Analyzing the Distributional Impact of Reforms : A Practioner's Guide to Trade, Monetary and Exchange Rate Policy, Utility Provision, Agricultural Markets, Land Policy and Education, Volume 1(Washington, DC: World Bank, 2005)The analysis of the distributional impact of policy reforms on the well-being or welfare of different stakeholder groups, particularly on the poor and vulnerable, has an important role in the elaboration and implementation of poverty reduction strategies in developing countries. In recent years this type of work has been labeled as Poverty and Social Impact Analysis (PSIA) and is increasingly implemented to promote evidence-based policy choices and foster debate on policy reform options.
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