Returns to Education: New Evidence for India, 1983–1999

Abstract

Abstract This paper estimates the returns to education for adult male workers in regular and casual wage employment using Indian national survey data at three points in time spanning almost two decades. Both standard and augmented Mincerian wage equations are estimated using a set of human capital measures and other controls after addressing the issue of potential selection bias. This paper finds that the returns to education are significantly different for the two types of workers—while casual workers face at best flat returns to education, the returns to education for regular workers are positive and U‐shaped with respect to education levels. There is also some evidence of a widening wage gap between regular workers with graduate and primary education that could possibly be a consequence of trade liberalization and other reforms pursued during the 1990s.