Skip to main content
eScholarship
Open Access Publications from the University of California

CHANGING PATTERNS IN MINCERIAN RETURNS TO EDUCATION AND EMPLOYMENT STRUCTURE IN THREE ASIAN COUNTRIES

  • Author(s): Mehta, Aashish
  • Felipe, Jesus
  • Quising, Pilipinas
  • Camingue, Shiela
  • et al.
Abstract

We analyze large nationally representative surveys of the labor force from three developing Asian economies (India, the Philippines and Thailand) at two points in time separated by a decade or more. Secondary and tertiary education attainment rose in the interim while the Mincerian education-wage profile became more convex. We document these shifts, allowing for inter-cohort dynamics. Returns to secondary education fell. Returns to college rose for older workers everywhere and for young workers in India, but fell for young Thais and Filipinos. We develop a new decomposition that permits us to attribute the shifting returns to education to the evolving structure of employment and inter- and intra-industry wage patterns. Secondary returns fell sharply in every sector as secondary-educated workers rapidly became available, while employment structures shifted slowly to absorb them. Conversely, rising returns within modern services were instrumental in lifting the returns to tertiary education. More manufacturing jobs will enable the Philippines to leverage higher growth from its human capital stock. Returns to secondary education in India have come to depend less on the manufacturing sector as manufacturing employment growth has been concentrated in low-skill sub-sectors. The intercohort divergence in returns to college arises in the Philippines and Thailand because excess young college-educated workers are pushed into low-wage or low-return jobs, while older college graduates are more likely to work in modern services. As modern service employment grows slowly, the largest and growing share of services employment has been in low-wage traditional services. From an employment perspective, “services-led development” therefore appears to be a red herring.

Main Content
Current View