Does education affect earnings? an application from Türkiye

Abstract

Education is an important determination for the earnings differentials. The differences in education and the earnings level are investigated in Mincer earnings function. In this study, return to education is investigated in Türkiye by Mincer earnings function using cross sectional data of the Household Budget Statistics micro data set in the years between 2011 and 2019. The return to education is estimated using semiparametric regression method and extended applying control function approach. The control function approach is used as instrumental variable and the 1997 education reform is applied as control function in the paper. The achieved findings of the study show that the education positively affects the earnings level in concerned period. Semiparametric regression estimation results indicate that this effect is higher for certain periods in each year. According to the control function approach results, the effect is negative in some periods contrary to semiparametric test results.