Private Returns to Education in Developing Countries: Evidence from Kosovo

Mic Ukaj; Avdullah Hoti; Rahmije Topxhiu

doi:10.18690/lexonomica.14.1.29-48.2022

Mic Ukaj University of Prishtina, Kosovo
Avdullah Hoti University of Prishtina, Kosovo
Rahmije Topxhiu University of Prishtina, Kosovo

DOI: https://doi.org/10.18690/lexonomica.14.1.29-48.2022

Keywords: human capital, rate of return, education, wages, labour market

Abstract

This paper aims to assess the reward that employees receive from education in the Kosovo labour market in terms of a wage premium. The incentive to address this issue comes as a result of the high increase in participation in formal education in recent decades, especially in higher education. The research is mainly focused on private benefits from education, in terms of wage increases, assessed through a private return to investment in education. For this research, microdata from the Labour Force Survey has been used, conducted by the Kosovo Agency of Statistics. We used only the sample of wage employees, which includes 9,300 individuals. The econometric model used in processing the empirical results is based on Mincer's wage equation. The results presented in section 5 reveal that the rate of return on education investment has been sufficient to keep the demand for education investment alive. In comparison to the other two levels of education (primary and secondary), the results indicate a very high rate of return to tertiary education, justifying the high enrollment in this level of education. Females receive a higher rate of return than males.

Povzetek. Namen tega prispevka je oceniti, kakšno nagrado dobijo zaposleni za izobraževanje na kosovskem trgu dela v obliki dodatka k plači. Spodbuda za obravnavo tega vprašanja je posledica velikega povečanja udeležbe v formalnem izobraževanju v zadnjih desetletjih, zlasti v visokem šolstvu. Raziskava se osredotoča predvsem na zasebne koristi od izobraževanja v smislu povečanja plač, ocenjene prek zasebnega donosa naložb v izobraževanje. Za to raziskavo so bili uporabljeni mikropodatki iz ankete o delovni sili, ki jo je izvedel Kosovski statistični urad. Uporabili smo samo vzorec zaposlenih, ki vključuje 9 300 posameznikov. Ekonometrični model, uporabljen pri obdelavi empiričnih rezultatov, temelji na Mincerjevi funkciji zaslužkov. Rezultati, predstavljeni v oddelku 5, kažejo, da je stopnja donosnosti naložb v izobraževanje zadostovala za ohranjanje povpraševanja po naložbah v izobraževanje. V primerjavi z drugima dvema ravnema izobraževanja (osnovnošolsko in srednješolsko) rezultati kažejo na zelo visoko stopnjo donosa terciarnega izobraževanja, kar upravičuje visoko stopnjo vpisa na to raven izobraževanja. Ženske prejmejo višjo stopnjo donosa kot moški.

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Author Biographies

Mic Ukaj, University of Prishtina, Kosovo

University of Prishtina "Hasan Prishtina", Prishtina, Kosovo, e-mail: micukaj@hotmail.com

Avdullah Hoti, University of Prishtina, Kosovo

University of Prishtina "Hasan Prishtina", Prishtina, Kosovo, e-mail: avdullah.hoti@gmail.com

Rahmije Topxhiu, University of Prishtina, Kosovo

University of Prishtina "Hasan Prishtina", Prishtina, Kosovo, e-mail: rahmije.topxhiu@uni-pr.edu

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