External Returns to Higher Education in Mexico 2000-2010

This paper estimates the external returns to higher education in Mexico using cross-sectional microdata from the 2000 and 2010 censuses’ samples. Results indicate that a one percentage point increase in the share of college graduates in Mexico increases the regression-adjusted average wages of a metropolitan area in more than six percent over a 10-year period. Analyzing whether these effects are mainly due to externalities or to supply movements along a downward sloping demand, it finds that part of the external returns to education is the result of externalities from direct or indirect interaction with these individuals.