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Expansion of higher education, employment and wages: evidence from the Russian transition


Kyui, Natalia (2013). Expansion of higher education, employment and wages: evidence from the Russian transition. Bank of Canada Working Paper 2013-45.


This paper analyzes the effects of an educational system expansion on labor market outcomes. It explores the expansion of higher education in the Russian Federation over the past 15 years as a natural experiment. Regional changes in the number of students allowed to be enrolled into universities, as a result of educational reforms, provide an exogenous variation in access to higher education. Using simultaneous equation models, the paper estimates the influence of education on employment and wages for those who successfully took advantage of increases in educational opportunities. The estimation results, which are robust to changes in model specifications, suggest strong positive returns to education in terms of wages and employment. Considering this gradual increase in university access, the paper further estimates heterogeneous returns to education for individuals who were exposed to different degrees of higher education expansion. The results reveal decreasing returns to education for those who, as a result of the reforms, increasingly pursued higher education. Moreover, a
non-parametric estimation of the model with essential heterogeneity is undertaken, in order to identify marginal returns to higher education. Returns to education are found to decrease for lower levels of individual unobserved characteristics, which positively influence higher education attainment. Therefore, the paper shows that the expansion of the higher education system significantly increased the wages of those who improved their educational attainment. Nonetheless, this increase was smaller than the returns to education for those who would have pursued higher education anyway.


Reference Type

Journal Article

Year Published


Journal Title

Bank of Canada Working Paper 2013-45


Kyui, Natalia