Private returns to education in Finland: Back to basics

This study explores the evolution of private returns to education in Finland by using a simple Mincer earnings equation framework and cross-sections of the Finnish Labour Force Survey compiled by Statistics Finland. Attempts are also made to examine the sensitivity of educational returns to the specification of the earnings equation as well as to the adopted estimation technique. The results indicate that the average return to an additional year of schooling has remained roughly unchanged among male workers over the 12-year period investigated, that is 1984–95. Among female workers, it was significantly lower in the 1980s, but increased in the early 1990s to approximately the same level as for men. Men and women fared equally well also when comparing average returns to different levels of education. These level-of-education returns further suggest that the marginal return to additional years invested in higher education is rather constant than declining. The addition of a broad set of personal and job-related background characteristics to the gender-specific wage equations has a minor influence on the estimated returns to education. – experience ; gender ; returns to education ; sector ; selection bias