Evolution of Education Premiums in Cambodia: 1997–2007

Abstract

Socio-economic Surveys of Households. The Cambodian labor market has undergone a transformation over the past decade. In 1997, the earnings of workers employed for wages exhibited limited association with education and skills. The picture was dramatically different by 2003 and more so by 2007. The profitability of education had increased sharply, especially for women. There is evidence that the human capital model is now applicable to both men and women, resulting in a wider distribution of earnings. Instrumental variables estimates of the return to an additional year of schooling for male wage earners are found to be higher than the corresponding OLS estimates, but only in the private sector.

Non‐farm employment and incomes in rural Cambodia

“…In this paper, we take a detailed look into non‐farm activities in rural Cambodia using a more appropriate dataset based on household survey data and alternative estimation techniques. Although the returns to schooling in Cambodia remain at levels that can be considered moderate for developing economies (Lall and Sakellariou 2010), we expect to find positive effects of education on participation in non‐farm activities. We also expect to find that larger households participate more in the non‐farm sector.…”

“…There is certainly space for improvement in the Cambodian education sector. First, educational attainment indicators for Cambodia are among the lowest in the ASEAN region (Lall and Sakellariou 2010). Second, there are significant direct and indirect costs of education that create a critical barrier to the rural poor.…”

“…This might sound curious because, as discussed in the previous section, the hourly wage is higher in the private sector than in the public sector. Previous literature (for example, Prescott and Pradhan 1997; Lall and Sakellariou 2010) has argued that those with more schooling may be attracted to the public sector by the non‐monetary benefits that this sector offers: less risk in terms of earnings, more job security, less demanding work conditions, etc.…”

“…6 6 The rationale for using smoking at an early age as an instrument is elaborated in more detail in Evans and Montgomery (1994), and Lall and Sakellariou (2010). …”

Returns to education in India: Capturing the heterogeneity

“…Studies by Hyder (2007) and Lall and Sakellariou (2010) in Pakistan and Cambodia, respectively, reveal that one additional year of education translates into higher wages in the private vis-a-vis the public sector, despite the concentration of higher educated individuals in the public sector domain. Similar reasons can be ascribed to the higher rates of return for the graduate and above level of education in the private sector.…”