Educational Choice Structure and the Rates of Return to Investment in Education RORE Assad L' A' Bau

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Educational Choice Structure and the Rates of
Return to Investment in Education (RORE)Assad
L. A. Baunto
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Key questionHow does choice among educational
structures affect rates of return to investment
in education (RORE)?
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Dual education system (e.g. standard
western-patterned formal education vs. Islamic
education or madrasah system)

• Complementarity
• Substitutability educational structures
• Independence

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• (i). Educational structures are complements
• Upward or downward biased standard RORE
  estimate depending on the MB and MC of
  complementary goods
• (ii). Educational structures are substitutes
• RORE is unaffected

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• (iii). Educational structures are independent
• upward biased RORE
• social identity specificity of human
  capital limits earnings prospects
• Overall, educational structure choice bias

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• Methodological issues
• Data
• madrasah only, western formal
  education only, madrasah and western formal
  education
• 2. Estimation
• Sample selectivity and endogeneity