The Benefits of Investing in Education in Russia (News and Research 271)

Russia has a highly educated population. Enrollments continue to grow.  There have been several studies published recently on the benefits to investing in schooling.

Starting with our working article in the Higher School of Economics Economic Review, Returns to Education in the Russian Federation: Some New Estimates, we find that:

  • Returns to schooling increased from 7% in 1994 to 9% in 2001
  • Returns averaged only 6% between 2008 and 2018
  • By 2018, returns had fallen to 5%

Returns to higher education:

  • Peaked at 18% in 1998
  • By 2018 they had settled at 8%
  • Returns to higher education still three times higher than for vocational education

Returns to education for females:

  • Much higher than for males

Controlling for endogeneity, we present causal estimates of the returns to schooling:

  • The causal estima­tes present a much higher rate of return: 14% for females, 8% for males

Melianova E., Parandekar S., Patrinos H., Volgin A. 2021. Returns to Education in the Russian Federation: Some New Estimates. HSE Economic Journal 25(3): 403-422

Kapelyushnikov challenges the prevailing consensus that the returns to education in Russia are low. He seeks to present the widest possible range of assessments of the return on education for Russia, introducing into scientific circulation several new sources of microdata, which have so far remained out of sight of both domestic and foreign researchers. Almost all existing assessments for Russia were carried out based on data from a single source: the Russian Monitoring of the Health and Economic Situation of the Population (RLMS HSE). Alternative surveys show that over the past 15 years, the returns to education in Russia has been higher, and, therefore, there has been no trend towards a decrease in its economic value.

Rozhkova and colleagues present evidence on the returns to a Master’s degree in Russia. This level of schooling has been growing in popularity in recent years. Using unique administrative data on the employment of graduates of Russian universities in 2020, they find a positive relationship between the availability of a master’s degree and labor market results a year after graduation. Having a master’s degree increases the likelihood of employment by 3-8% for men and 10-16% for women. In addition, a master’s degree is associated with a salary bonus of 5-21% for women and 2-11% for men.

Kyui and Radchenko study the effects of the changing composition of academic majors during expansion of higher education on the dynamics of wage distribution. Using a unique dataset constructed from open-ended responses in the RLMS, they conduct a structural analysis of wage distribution dynamics for higher education graduates over 2002-2016. Their findings suggest that changing wage inequality among university graduates is due to both changes in skill prices and wage shocks induced by economic fluctuations. Moreover, variation in skill prices relates to equilibrium effects induced by changes in the supply of graduates specialized in different fields. Uneven expansion in certain majors induces labor market saturation and leads to an increase in the wage variance of graduates from the fastest growing majors. The estimation results also show the importance of accounting for within-major heterogeneity across cohorts, which could reflect differences in student ability distribution, changes in academic content, and changes in educational quality over time.

Other recent and classic works on returns to education in Russia:

College expansion and the marginal returns to education: evidence from Russia

Returns to Education in Russia: Where there is Risky Sexual Behaviour there is also an Instrument

The educated Russian’s curse: returns to education in the Russian Federation during the 1990s

Returns to human capital investment in a transition economy: The case of Russia, 1994‐1998

Zero returns to higher education: Evidence from a natural experiment

College expansion and the marginal returns to education: evidence from Russia

The Economic Significance of National Education