EDUCATION AND EARNINGS IN THE MIDDLE EAST: A COMPARATIVE STUDY OF RETURNS TO SCHOOLING IN EGYPT, IRAN, AND TURKEY

This paper presents a comparative study of private returns to schooling in Egypt, Iran, and Turkey using similar survey data and a uniform methodology. We employ three surveys for each country that span nearly two decades, ranging from 1987 to 2006. Our aim is to learn from survey data about the signals of rewards that individuals use in their decisions to invest in education. So we pay special attention to differences across countries and over time in the institutions of education and labor markets, and how these differences might be related to the observed patterns of rewards to education. We find a fair amount of consistency in the patterns of returns between the countries, as well as important differences that suggest the influence of institutions. We find that returns to education increase in years of schooling in all three countries, as one would expect in countries with relatively rigid labor markets, where heavy emphasis on higher terminal degrees reduce the value of basic education. Private returns to tertiary relative to upper secondary and vocational education are high, confirming that university education is highly attractive in these countries. Low returns to vocational training relative to general upper secondary, which have been observed in many developing countries, are true in Egypt and Iran, but not Turkey. We attempt to reconcile these facts with the institutional features of the countries and changes over time.