Convexity and Sheepskin Effects in the Human Capital Earnings Function : Recent Evidence for Filipino Men

Convexity and Sheepskin Effects in the Human Capital Earnings Function : Recent Evidence for Filipino Men

Much attention has been paid to the issue of possible nonlinearities in the relationship between log wages and schooling in the literature on both the United States and developing countries. The author uses data from a recent household survey for the Philippines, the 1998 Annual Poverty Indicator Survey, to test the fit of the log-linear specification for Filipino men. He presents results based on various estimation strategies, including spline regressions and semi-parametric regressions with a large number of dummy variables for years of schooling and experience. He concludes that: 1) There appear to be large differences between rates of return to education across different levels in the Philippines. The wage premia for both primary and secondary education are significantly smaller than those for tertiary education. 2) Within each level - primary, secondary, and university - the last year of schooling is disproportionately rewarded in higher wages. That is, there appear to be clear sheepskin effects associated with graduation.

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Bibliographic Details
Main Author: Schady, Norbert R.
Language:English
en_US
Published: World Bank, Washington, DC 2001-03
Subjects:ADDITION, ADMINISTRATIVE DATA, AGED, ATTENDING SCHOOL, BASIC EDUCATION, COMPOSITION, COSTS OF EDUCATION, DEVELOPING COUNTRIES, EDUCATION LEVEL, EDUCATION LEVELS, EMPIRICAL STUDIES, EMPLOYMENT, ENGINEERING, ENROLLMENT, ENROLLMENT RATE, ENROLLMENT RATES, FORMAL EDUCATION, FRACTIONS, GIRLS, GROSS ENROLLMENT, GROSS ENROLLMENT RATES, GROSS ENROLLMENT RATIO, GROSS ENROLLMENT RATIOS, HIGH ENROLLMENT, HOUSEHOLD INCOME, HOUSEHOLD SURVEYS, HOUSING, INNOVATION, LABOR FORCE, LABOR MARKET, LEARNING, LEVELS OF EDUCATION, LITERATURE, PAPERS, PARENTS, POSITIVE IMPACT, POVERTY REDUCTION, PRIMARY EDUCATION, PRIMARY SCHOOL, PRIMARY SCHOOLING, PRIVATE COSTS, PRIVATE SECTOR, PUBLIC SECTOR, QUALITY EDUCATION, QUALITY OF EDUCATION, RATES OF RETURN, RECENT EVIDENCE, REPETITION, REPETITION RATES, RURAL AREAS, SCHOOLING, SECONDARY EDUCATION, SIBLINGS, SIGNIFICANT IMPACT, SPEAKING, SPORTS, TEACHER, TEACHER SALARIES, TEACHERS, TEACHING, TEACHING MATERIALS, TERTIARY EDUCATION, UNIVERSITY EDUCATION, URBAN AREAS, VOCATIONAL TRAINING, WORKERS, WORKING HOURS,
Online Access:http://documents.worldbank.org/curated/en/2001/03/1047467/convexity-sheepskin-effects-human-capital-earnings-function-recent-evidence-filipino-men
https://hdl.handle.net/10986/19688
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Summary:Much attention has been paid to the issue of possible nonlinearities in the relationship between log wages and schooling in the literature on both the United States and developing countries. The author uses data from a recent household survey for the Philippines, the 1998 Annual Poverty Indicator Survey, to test the fit of the log-linear specification for Filipino men. He presents results based on various estimation strategies, including spline regressions and semi-parametric regressions with a large number of dummy variables for years of schooling and experience. He concludes that: 1) There appear to be large differences between rates of return to education across different levels in the Philippines. The wage premia for both primary and secondary education are significantly smaller than those for tertiary education. 2) Within each level - primary, secondary, and university - the last year of schooling is disproportionately rewarded in higher wages. That is, there appear to be clear sheepskin effects associated with graduation.

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