Private Returns to Levels of Education in Turkey: Evidence from Panel Data

Along with the emergence of the concept of human capital, there has been an increase in research on the economic contribution of education. One of the most important reasons to invest in education is wage differentials. But there are many direct and indirect, private and social contributions of education. Because of these reasons demand for education has been increasing. There are different stages of education from primary education to higher education and each education level has a different economic return. Therefore, the main purpose of this study is to investigate whether there is a positive relationship between education and wage income and whether the rate of return to education vary for different levels of education. This study uses Income and Living Conditions Survey Panel Dataset provided by the Turkish Statistical Institute covering from years 2008-2011 and 2012-2015 and employs panel econometric methods, considering the endogeneity problem, to estimate both private returns to education and each level of education. The study concludes that increases in educational level affect the income levels in the same direction but at different rates.