How does education level affect wages?
Tashkent, Uzbekistan (UzDaily.com) -- The Institute for Forecasting and Macroeconomic Research (IPMI) continued a study to assess the growth in wages of the population depending on the level of education.
With the increase in differentiation between wages of highly and low-skilled jobs, the requirements for qualifications, skills, as well as minimum levels of education of employees are also increasing. With the continuous growth of requirements for the level of qualification of personnel, the concept of "lifelong education" is becoming more and more popular all over the world. Do holders of diplomas of higher levels of education receive compensation for the time and energy spent after entering the labor market in Uzbekistan? To obtain evidence-based answers to these questions, IPMI experts conducted an empirical assessment of the impact of formal education levels on wages in the context of education levels and economic sectors.
According to the results of the study, the return on the degree of Doctor of Science (DSc) in Uzbekistan exceeds 61%, PhD or PhD - 41%. Also, the relative economic value of an undergraduate honors degree in the labor market is 8.5% higher compared to regular graduates. These estimates make it possible to confirm the "payback" of higher and higher quality levels of education, and therefore the time and effort spent on obtaining it.
To assess the economic returns from the highest levels of education in Uzbekistan, IPMI specialists conducted an online survey among the population over 18 years old on the topic “Returns to education”. The survey was conducted among random respondents who actively use social networks. 1152 online responses were received (61% of men and 39% of women) from the regions of the Republic of Uzbekistan. The study evaluated the results of 906 questionnaires (the answers of the respondents were not taken into account: not working of their own free will, temporarily unemployed, employed in caring for a child, students in the bachelor’s, master’s, full-time basic doctoral studies and doctoral studies, and also incorrect and identical answers were excluded).
In terms of education, out of 906 respondents, 3.3% DSc (or Doctor of Science), 18.2% PhD (or Candidate of Science), 33.1% Masters, 33.3% Bachelors, 15.3% graduates of universities before the separation of Bachelor’s and graduates, 7.0% are graduates of secondary vocational institutions, 3.0% with secondary and 0.4% with basic secondary (9 grades) education.
The analysis of the payback of education was carried out on the basis of the well-known "Mintzer equation of earnings". The estimation was carried out in the Stata software package by the least squares method.
According to the results of the assessment in Uzbekistan, each formal additional year of education contributes to an increase in the salary of an employee by an average of 10%, which is in line with the assessment of the UN Educational, Scientific and Cultural Organization: “Around the world, in 139 countries, the rate of return on each additional year of study is 10%"
Employed in the economy with a DSc or PhD degree, on average, receive 61% more wages, with a PhD or PhD degree - 41% higher than employees with a previous level of education.
Respondents with an honors degree (graduates of a bachelor’s degree or a university before switching to the Bologna system) receive 8.5% higher wages in the labor market than their compatriots without an honors degree.
In terms of sectors of the economy among the respondents, the highest average salary falls on those employed in the field of computer technology. They receive salaries from 28% to 37% (depending on the level and duration of education) more than other industries. Economists by 24-37%, financiers by 29-30% and those engaged in professional and scientific and technical activities (legal, consulting, accounting and other professional services) are 27-38% more than the average salary in the republic. Those employed in public administration and defense receive 25-31% more for their work. Representatives of the industrial sector by 22-24% and construction by 25% more.
In general, in the economy, the wages of men are from 23 to 28% higher than those of women. At the same time, each additional year of study brings 11% more income for women, and 8.7% for men. If married men earn 16% more than men without a family, then women after the creation of a family earn 27% less than before marriage. Residents of the capital’s wages are 23-24% higher (30% for men, 16.3% for women) than residents of other regions.
An analysis of the gap in earnings between respondents with different levels of education allows students and their families to navigate in making decisions about investing in the human capital of a family member.
At the next stage of the study, IPMI experts plan to develop a calculator for calculating the amount of investment required to achieve a certain profession with a set of necessary skills, competencies and the highest qualifications.