The Effect of Education on Earnings in a Post-Conflict Economy: Evidence from Bosnia and Herzegovina

Abstract

This paper investigates the effect of formal education on individual earnings in Bosnia and Herzegovina (BiH). We use empirical regression analysis and an extended Mincer’s model, which are applied to the Labour Force Survey data from 2018. Our empirical results suggest that a higher level of both statutory and additional education has positive and statistically significant effect on higher earnings of individuals in this post-conflict society. Such a finding implies that investment in education, both statutory and additional, bring economic benefits to individuals, although this is sometimes challenged by the general public of this society. Moreover, we find that employees in the public sector record systematically higher earnings than those in the private sector, suggesting a need for strategic policies targeting this difference. The outcome of our analysis is a good indicator of productivity achieved through improved educational performance, and thus provides scientific evidence to the positive effect of human capital hypothesis in BiH.

Exposure to Conflict, Migrations and Long-run Education and Income Inequality: Evidence from Bosnia and Herzegovina

“…In looking at individual characteristics of respondents, we find that the effect of age is important in all models: older respondents have a slightly higher income, while younger respondents have a higher level of education. Gender also plays an important role; male respondents report both higher income and better educational performance (consistent with Rizvanovic and Efendic 2021). Finally, ethnicity shows mainly statistically significant effects on education and income, with the dominant ethnicities in BiH performing at a higher rate in both categories.…”

The Economy of Education: Development, Challenges, and Prospects in Bosnia and Herzegovina

“…The primary objective of this paper is to offer a comprehensive understanding of the economy of education in Bosnia and Herzegovina (Rizvanovic & Efendic, 2021). By analyzing the existing literature, the paper aims to track the development of this field of research, identifying key studies and scholarly contributions related to BiH.…”

“…This research is important because it aims to analyze profoundly to produce a model construct as a reference source for education management, especially in developing countries. Education is a financial transaction and a social investment with far-reaching effects (Hill, 2011;Rizvanovic & Efendic, 2021). Understanding the economy of education enables policymakers to make informed decisions to maximize education investments, improve outcomes, and promote sustainable economic growth (Kochetkov et al, 2017;OECD, 2021).…”