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Labor Market Rate of Return to Education in Developing Countries

The pioneering education economist Theodore Schultz began his 1979 Nobel lecture with “Most of the people in the world are poor, so if we knew the economics of being poor we would know much of the economics that really matters.” Schultz inspired a large body of research that considers the educational decisions (i.e., enrollment and attainment) of individuals and their families. Education economists assess these decisions using the private labor market rate of return to education (henceforth, LMRRE). Essentially, the LMRRE is a measure (expressed as a percentage) of whether monetary educational costs are worth incurring for future monetary labor market benefits. LMRRE estimates help education economists and policymakers understand patterns and determine interventions; for example, low LMRRE estimates for secondary education may explain low ...

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