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Returns to education among the informally employed in Thailand
Author(s) -
Vivatsurakit Tanthaka,
Vechbanyongratana Jessica
Publication year - 2020
Publication title -
asian‐pacific economic literature
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 21
eISSN - 1467-8411
pISSN - 0818-9935
DOI - 10.1111/apel.12284
Subject(s) - wage , instrumental variable , formal education , economics , demographic economics , labour economics , work (physics) , informal sector , rate of return , economic growth , business , sociology , finance , econometrics , engineering , mechanical engineering , pedagogy
Thailand experienced rapid economic development and made significant investments in education over the past four decades; however, more than half of Thai workers remain informally employed. Despite the prevalence and persistence of informal work in Thailand, little is known about the returns to investments in formal education among informal workers. Using individual‐level data from the 2011, 2013, and 2015 Thailand Household Socio‐economic Surveys, this study estimates the wage returns to years of education for informal workers using an instrumental variable (IV) approach to correct for potentially biased coefficient estimates on years of education due to unobserved ability. Contrary to expectations, informally employed Thai workers find substantial returns to investments in formal education. The results under the IV approach indicate that the return to an additional year of education for the informally employed is 11–12 per cent, compared to almost 15 per cent for formally employed private firm workers.