Occupation Choice Matters to the Economic Return of the School Year in Nepal. Evidence from Household Cross-Sectional Data.
64th ISI World Statistics Congress - Ottawa, Canada
Format: CPS Paper
Keywords: economic-return, instrumental variable, nepal, school-year, wage
Session: CPS 37 - Statistics and economics I
Tuesday 18 July 8:30 a.m. - 9:40 a.m. (Canada/Eastern)
The different economic return pushes a question in the scholars' minds that the economic return depends on the school year or the occupation choices in Nepal. In this regard, this study finds the positive impact of school year on economic return as a wage. School year is endogenous; that might estimate biased results. The instrumental variable (IV) technique is applied to estimate unbiased and consistent results. Using instrumental variables on Nepalese household level microdata, an additional year of schooling increases the economic return in terms of wage by 4.3 percent. When controlling factors are considered, the percentage drops to 2.8 percent. In addition, the estimates show that education return for female’s (8.9 percent) is higher than for males (2.2 percent). The choice of occupation has a substantial impact on the economic return of the school year when comparing wages among occupations on the Nepali labor market. Out of the nine occupations in Nepal, those connected to professionals have the highest return on education (21.5 percent), followed by those associated to technical and associate occupations (14.1 percent). Furthermore, a few scholars found the economic return of the school year about 6 percent by using OLS. This study also supports previous studies and confirmed the economic return of the school year has a significant positive impact using different IV techniques of estimation.