Abstract
This study examines the trends of returns to education in India using unit-level data from the National Periodic Labour Force Survey conducted in the years 2017–18, 2018–19, and 2019–20. Here, distinct estimates are derived from the mincerian wage equation using ordinary least square for three distinct categories of workers: regular, casual, and self-employed. The findings demonstrate substantial rise in returns to education corresponding to the level of education attained among regular workers, pointing to higher salaries for improved education over time due to more employment opportunities. Whereas casual and self-employed workers don’t seem to benefit much from education. This clearly indicates that interest of the Indian youth is more inclined towards regular jobs. However, if we have to make the economy grow for that we need to increase returns in casual and self-employed jobs so the dependency on regular jobs can be restrained. This will ultimately help us to bring employment in the hinterland of India. Result showcased that there is striking disparities across gender and locations. Men receive higher returns from education than women. Furthermore, returns to urban regions outpace those to rural regions.
Similar content being viewed by others
Data availability
The datasets generated during the current study are available at the website of the Ministry of Statistics and Programme Implementation (https://mospi.gov.in).
References
Agrawal T (2012) Vocational education and training in India: challenges, status and labour market outcomes. J Vocat Educ Train 64(4):453–474. https://doi.org/10.1080/13636820.2012.727851
Agrawal T (2013) Gender and caste-based wage discrimination in India: some recent evidence. J Labour Mark Res 47(4):329–340. https://doi.org/10.1007/s12651-013-0152-z
Asadullah MN (2006) Returns to education in Bangladesh. Educ Econ 14(4):453–468
Bahl S, Bhatt V, Sharma A (2021) Returns to formal and informal vocational education and training in India. Int J Manpow 43(7):1620–1645
Bhalla S (1987) Trends in employment in Indian agriculture, land and asset distribution. Indian J Agric Econ 42(4):537–560. https://doi.org/10.22004/ag.econ.271868
Bhattacharya P, Sato T (2017) Estimating regional returns to education in India: a fresh look with pseudo-panel data. Prog Dev Stud 17(4):282–290
Binswanger HP, Singh S (2017) Wages, prices and agriculture: how can Indian agriculture cope with rising wages? J Agric Econ 69(2):281–305. https://doi.org/10.1111/1477-9552.12234
Divakaran S (1996) Gender based wage and job discrimination in urban India. Indian J Labour Econ 39(2):327–340
Duraisamy P (2002) Changes in returns to education in India, 1983–94: by gender, age-cohort and location. Econ Educ Rev 21(6):609–622. https://doi.org/10.1016/s0272-7757(01)00047-4
Dutta PV (2006) Returns to education: new evidence for India, 1983–1999. Educ Econ 14(4):431–451. https://doi.org/10.1080/09645290600854128
Jha B (2006) Employment, wages, and productivity in Indian agriculture. Institute of Economic Growth, Delhi
Jones PM (2001) Are educated workers really more productive? J Dev Econ 64(1):57–79. https://doi.org/10.1016/s0304-3878(00)00124-3
Kingdon G (1998) Does the labour market explain lower female schooling in India? J Dev Stud 35(1):39–65. https://doi.org/10.1080/00220389808422554
Li H, Liu PW, Zhang J (2012) Estimating returns to education using twins in urban China. J Dev Econ 97(2):494–504. https://doi.org/10.1016/j.jdeveco.2011.05.009
Machlup, F. (1982). Issues in the theory of human capital: education as investment. Pak Dev Rev 21(1):1–17. http://www.jstor.org/stable/41239020
Maritz A, Foley D, Jones C, Andrews J, Shrivastava A (2021) Entrepreneurship and self-employment among indigenous people. Int J Indig Issues 24:3–4. https://doi.org/10.3316/INFORMIT.252862385381350
Mendiratta P, Gupt Y (2013) Private returns to education in India by gender and location: a pseudo panel approach. Arthaniti-J Econ Theory Pract 12(1–2):48–69. https://doi.org/10.1177/0976747920130103
Mincer JA (1974) The human capital earnings function. In schooling, experience, and earnings. Natl Bureau Econ Res pp 83–96. http://www.nber.org/chapters/c1767
Mitra A (2019) Returns to education in India: capturing the heterogeneity. Asia Pac Policy Stud 6(2):151–169
Nepram D, Singh SP, Jaman S (2021) The effect of government expenditure on unemployment in India: a state level analysis. J Asian Financ Econ Bus 8(3):763–769. https://doi.org/10.13106/jafeb.2021.vol8.no3.0763
Pauw K, Oosthuizen M, Van Der Westhuizen C (2008) Graduate unemployment in the face of skills shortages: a labour market paradox. South Afr J Econ 76(1):45–57. https://doi.org/10.1111/j.1813-6982.2008.00152.x
Psacharopoulos G (1973) Substitution assumptions versus empirical evidence in manpower planning. De Economist 121(6):609–625. https://doi.org/10.1007/bf01460457
Psacharopoulos G (1985) Returns to education: a further international update and implications. J Hum Resour 20(4):583–604. https://doi.org/10.2307/145686
Psacharopoulos G (1994) Returns to investment in education: a global update. World Dev 22(9):1325–1343. https://doi.org/10.1016/0305-750x(94)90007-8
Psacharopoulos G, Patrinos HA (2004) Returns to investment in education: a further update. Educ Econ 12(2):111–134
Psacharopoulos G, Patrinos HA (2018) Returns to investment in education: a decennial review of the global literature. Educ Econ 26(5):445–458. https://doi.org/10.1080/09645292.2018.1484426
Rani PG (2014) Disparities in earnings and education in India. Cogent Econ Financ 2(1):941510. https://doi.org/10.1080/23322039.2014.941510
Sahota GS (1962) Returns to education in India. Asian Workshop Paper. University of Chicago, pp 6–11
Singhari S, Madheswaran S (2016) The changing rates of return to education in India: evidence from NSS data
Shaffer, H. G. (1961). Investment in human capital: comment. Am Econ Rev 51(5):1026–1035. http://www.jstor.org/stable/1813847
Somayya N (2023) Unemployment rate slides down in May. Centre for Monitoring Indian Economy Pvt. Ltd. DIALOG. https://www.cmie.com/kommon/bin/sr.php?kall=warticle&dt=20230607142736&msec=266. Accessed 11 June 2023
Sridhar KS, Reddy AV, Srinath P (2013) Is it push or pull? recent evidence from migration into Bangalore. India J Int Migr Integr 14(2):287–306. https://doi.org/10.1007/s12134-012-0241-9
Tilak JB (1987) The economics of inequality in education. Sage Publications India Private Limited, New Delhi
Tilak JBG (1988) Costs of education in India. Int J Educ Dev 8(1):25–42. https://doi.org/10.1016/0738-0593(88)90029-6
Tinbergen J (1975) Income distribution: analysis and policies
UNESCO (2018) Migration, displacement and education: building bridges, not walls, Global Education Monitoring Report
Unni J (2001) Earnings and education among ethnic groups in rural India. National Council of Applied Economic Research
Vatta K, Sato T (2018) Garima Taneja precision agriculture for development Indian labour markets and returns to education. https://doi.org/10.1177/0976399616655001
Wei X, Tsang MC, Xu W, Chen L (1999) Education and earnings in rural China. Educ Econ 7(2):167–187. https://doi.org/10.1080/09645299900000014
Wodon QT (1999) Growth, poverty, and inequality: a regional panel for Bangladesh. Working Paper No. 2072, The World Bank
Funding
The authors do not have any pertinent financial or non-financial interests to report..
Author information
Authors and Affiliations
Contributions
The study's conception and methodology were shaped through the collective contributions of all authors. A took charge of composing the manuscript and conducted result analyses. NKB, after reading the paper, made crucial corrections before its submission. Prior to submission, both authors carefully reviewed and endorsed the paper.
Corresponding author
Ethics declarations
Conflict of interest
The authors declare not competing interests.
Ethical approval and Informed consent
This article does not include any studies involving human participants conducted by any of the authors.
Supplementary Information
Below is the link to the electronic supplementary material.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Aakanksha, Bishnoi, N.K. Education and earnings: examining the returns across regular, casual, and self-employed labour markets. SN Bus Econ 4, 64 (2024). https://doi.org/10.1007/s43546-024-00663-0
Received:
Accepted:
Published:
DOI: https://doi.org/10.1007/s43546-024-00663-0