How can we use data on the return to education to estimate how differences in education...

How can we use data on the return to education to estimate how differences in education among countries contribute to differences in income among countries?

Solutions

Expert Solution

Data set having return to education and level of education can be used to regress against each other. Here, return to education is the dependent variable and education level is independent variable in the regression.

For example, following regression equation is created:

Return to education = A + b*Education level

Here, A = intercept

and b = coefficient of education level.

Now, above equation can be used to put the education level in the country and the income level earned by the people who have got their education level in that country. So, the different level of education and corresponding level of income, represent the income level driven by the education. So, with the help of this equation, education can be considered as a determining factor of income level rise.

Rahul Sunny answered 1 year ago

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