The relevance of standard estimates of rates of return to schooling for education policy: A critical assessment

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Abstract

This paper examines the accuracy and usefulness of estimated rates of return to schooling based on the standard human capital model of Becker and Mincer. Regarding accuracy, it investigates whether failure to account for differences in ability and school quality lead to significant biases. Estimates using Ghanaian data confirm this possibility. Even when accurate, estimated rates of return to additional years of schooling may have limited policy implications; more useful for governments are rates of return to investments in school quality. The paper uses data on cognitive skills to estimate rates of return to three types of school quality improvements.

Original languageEnglish (US)
Pages (from-to)267-290
Number of pages24
JournalJournal of Development Economics
Volume51
Issue number2
DOIs
StatePublished - Dec 1 1996

Keywords

  • Ghana
  • I21
  • Investments in education
  • J24
  • O15
  • Returns to schooling
  • School quality

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