Beyond Mincer: Revisiting the Returns to Education in Thailand

This paper investigates the private and social return to higher education in Thailand. First, we analyze the individual return to higher education by using Socio-Economic Survey (SES) panel data and employing three treatment effects including propensity score matching (PSM), endogenous switching (ES) regression and endogenous binary treatment using probit two stage least square (Probit-2SLS) model. Then, we estimate the social return to higher education using Labor Force Survey (LFS). We identify the social return by estimating the effect of share of higher educated workers living in each province on individual wage and provincial wage gap using instrumental variable (IV) and pseudo panel approach at provincial level accounting for cohort effects. The results show that obtaining higher education increases wage by around 0.98 to 1.78 log points, and the increase in the provincial share of higher education raises individual’s wage and reduce the wage inequality among different provinces. The findings suggest that investment in higher education will improve the income distribution as it contributes more to workers with less education and in lower wage occupations.