DP8689 Average and Marginal Returns to Upper Secondary Schooling in Indonesia

Author(s): Pedro Carneiro, Michael Lokshin, Cristobal Ridao-Cano, Nithin Umapathi
Publication Date: December 2011
Keyword(s): average return, Marginal return, marginal treatment effect, Return to Education
JEL(s): J2, J3, J31
Programme Areas: Labour Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8689

This paper estimates average and marginal returns to schooling in Indonesia using a non-parametric selection model. Identification of the model is given by exogenous geographic variation in access to upper secondary schools. We find that the return to upper secondary schooling varies widely across individuals: it can be as high as 50 percent per year of schooling for those very likely to enroll in upper secondary schooling, or as low as -10 percent for those very unlikely to do so. Average returns for the student at the margin are well below those for the average student attending upper secondary schooling.