Return to Education and Education-Occupation Matching within a Transition Economy
نویسنده
چکیده
This paper makes a thorough analysis of the return to tertiary education and education-occupation matching within the transition economy compared to a developed economy. We show through the example of the Russian Federation that the increase in the return to education which happened in previous years does not indicate that the labour market is becoming closer to that of developed countries. We have deconstructed the standard estimation of the return to education in the three parts characterising the labour market: education-occupation matching, payment for occupations and payment for productivity within occupations. First, we compare the non-parametric estimation of wages distributions by educational and occupational groups within the Russian labour market and a developed country’s labour market (we take France as an example). Secondly, we estimate a joint reduced-form model of the educational choice, labour market participation, placement of employees among occupational categories and wage formation. This joint model allows us to take into account correlations between unobservable factors that simultaneously influence the educational choice, occupational choice and final wage. A wide range of explanatory variables is used, characterising not only individuals, but also their households, job, industries of work and regions. This allows us to analyse the influence of the family’s network on the placements among occupational categories and wage formation. We take into account the observed heterogeneity of return to education among analysed population. We show the advantages of proposed approach for analysis of transition labour markets versus standard approaches to transition economies.
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