Labour Market Returns to Education: Evidences from Bangladesh

Abstract

This study estimates the rate of returns to education (RORE) in Bangladesh at the individual level. Adopting the Mincer earningsfitnction, the study attempts to obtain robust and unbiased estimates of RORE by applying both IV 2SLS and Heckman two step procedures. Parents' and spouse's education have been used as IV in two separate models and am,found to be strongly related to schooling of individuals. Significant selection and endogeneity bias exists in the OLS estimation. Results indicate RORE is considerably low in Bangladesh.