Returns to Education and Economic Transition: An International Comparison

Overview & Synopsis

This paper compares the returns to education in transitional economies in Central and Eastern Europe (CEE), such as Bulgaria, the Czech Republic, Romania, Russia, Slovak Republic and the Ukraine in the 1990s, and in China in the 1980s and 1990s. In the pre-transition period, the returns to education in the six CEE countries were low at about 2-4%, while those in China were even lower at less than 2%. As the process of transition towards a market economy evolved over time, the returns to education steadily increased, and non-state sector workers and young workers were rewarded with higher returns to their education than their counterparts in the state sector and older age categories. The marginal returns to university education are the highest of all of the marginal returns to various education levels. Moreover, the results show that it took about a decade for the six CEE countries, and two decades for China, to raise their respective returns to education to the 10% level. (Contains 3 figures and 7 notes.)