EDUCATIONAL-ATTAINMENT AND EARNINGS DETERMINATION IN COLOMBIA

A better understanding of the role of education and the process of self-selection is an essential element in the evaluation of educational policies. The results of this study contribute by illustrating the importance of workers' heterogeneity and self-selection in the estimation of rates of return to education. We have considered the issue of selection bias in the schooling-earnings relationship by treating schooling as a continuous variable and estimating selection bias-corrected earnings equations for a sample of young Colombians. Selection bias was found to be a very important factor for both males and females. Individuals who choose more schooling have higher rates of return to schooling than individuals who choose less schooling. Overall, uncorrected estimates of the returns to education are between 2% and 3% lower than selection bias-corrected rates of return to education. -from Authors