The returns to education in Indonesia: Post reform estimates

摘要: The profitability of an investment in education Indonesia has been a discussed issue for the past decades. Both Deolalikar (1993) and Duflo (2001) provided comprehensive estimates returns to both them argued that schooling was profitable investment. This paper updates evidence on Indonesia, using OLS IV approaches. It describes statistical relationship among market earnings, years schooling, age job tenure (experience), quadratics tenure, marital status, male-female rural-urban dummies. In analysis, we use primary data from Indonesian Family Life Survey 4 (IFLS4). IFLS4 is nationally representative sample comprising 13,536 households 50,580 individuals, spread across provinces islands Java, Sumatra, Bali, West Nusa Tenggara, Kalimantan, Sulawesi. earnings function estimated three samples: combined males females (with female intercept shift term), separate samples male workers. empirical results show are 4.72 per cent sample, 4.36 males, 5.26 females. However, between not statistically significant any estimations. We also make comparisons with findings (2001), based earlier 1995. These enable assessment changes ability bias over this period reform. same as, or greater than, estimates. consistent literature developed countries, suggests does attract wage premium but may be correlated instruments. Although adopting approach increases these remain low compared other Asian as well less countries. Therefore, market-oriented economic reforms going several decades should evaluated by policy makers considering whether generating higher jobless growth take proper measure, if there any.