Rates of Returns to Human Capital Investments in Albania

Gjipali, Arsena
Kristo, Suela
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This paper develops a comprehensive framework of the main hypothesis tested whether the private returns to investment in education in Albania are sufficient to provide economic incentives for a high participation rate in post-compulsory schooling. We use cross section data from the Living Standards Measurement Survey (LSMS) of 2002 and develop a comprehensive framework for our quantitative analysis of the private returns to schooling and private incentives to invest in education. We construct estimates of the private return to each post-compulsory schooling level, taking into account the effects of education on wages. Evidence from the data shows that the significant part of return to secondary education is linked to further returns to higher education. This finding might explain the reduced incentives to invest in additional human capital.
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