Estimated rate of return to education

Abstract

This study estimates the rate of return of education applying the Mincer model according to educational levels based on the data from the 2007 household survey. The result is a total return rate of 10%, which is evidence that in El Salvador, wages receive a positive impact when people have a certain level of education. This figure displays an increasing tendency due to the fact that since 2002 the results were around 8%. This shows that in El Salvador, investment in education is increasingly getting more value as the private return has  a positive impact as time passes by. The other variables that impinge on the level of wages are experience, being male and living in an urban area. These results show the need of designing and implementing policies in order to prevent certain type of discrimination and to favor equity in the labor market opportunities and in the salaries as well.