Estimate of the private return on education in Indonesia: Evidence from sibling data

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4 Citations (Scopus)

Abstract

This study reexamines the return on education (ROE) in Indonesia to solve the puzzle between the high ROE from previous studies and the low enrollment rate for higher education by taking into account endogeneity and sample selectivity issues. This study finds the OLS estimates of ROE in between 10% and 12%. After controlling for unobserved family background using sibling data, the Household Fixed Effect estimate indicates ROE reduces from 10.8% to 5%. This study argues ROE is not as high as previously estimated and may explain why the enrollment rate for college has been stagnating in Indonesia.

Original languageEnglish
Pages (from-to)14-24
Number of pages11
JournalInternational Journal of Educational Development
Volume42
DOIs
Publication statusPublished - 1 May 2015

Keywords

  • Higher education
  • Indonesia
  • Return on education

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