Private Returns to Education in Developing Countries: Evidence from Kosovo

Abstract

This paper aims to assess the reward that employees receive from education in the Kosovo labour market in terms of a wage premium. The incentive to address this issue comes as a result of the high increase in participation in formal education in recent decades, especially in higher education. The research is mainly focused on private benefits from education, in terms of wage increases, assessed through a private return to investment in education. For this research, microdata from the Labour Force Survey has been used, conducted by the Kosovo Agency of Statistics. We used only the sample of wage employees, which includes 9,300 individuals. The econometric model used in processing the empirical results is based on Mincer's wage equation. The results presented in section 5 reveal that the rate of return on education investment has been sufficient to keep the demand for education investment alive. In comparison to the other two levels of education (primary and secondary), the results indicate a very high rate of return to tertiary education, justifying the high enrollment in this level of education. Females receive a higher rate of return than males.