Mohammad Osman Adel

Abstract

 

This study has focused on the estimation of economic return to schooling in Afghanistan. It is based on the human capital theory, which examines the marginal effect of schooling and work experience on the individuals’ earnings. The main objective of this study is to estimate the effect of years and levels of schooling on the wages, which identifies the wage gap between schooled and unschooled workers. Likewise, it estimates the effect of other important factors on wages, such as skills, sex and sector type. The Mincer’s model (OLS) has been employed in this research as the estimation method using the regression of wage on years of schooling to examine the wage difference between schooled and unschooled employees. The empirical result of the regression analysis shows that there is a significant difference between the earnings of schooled and unschooled employees in Afghanistan. The individuals who have completed high school earn 67.9% higher wages than those who have not enjoyed of education. This indicates the applicability of the human capital theory and desirable return to schooling in Afghanistan. Similarly, the significant effect of education and other human capital factors on individuals’ earnings encourage policy makers and families to invest properly in education field of Afghanistan.

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