Uncertain educational returns in a developing economy

Abstract: This paper estimates the distribution of educational returns by gender for India. While previous studies focus on mean returns, the variance of educational returns has important implications for policy-making and micro-level decision making with respect to education. If the variance of educational returns is large, it can leave large sections of the population with negative returns; if the variance of educational returns is gender specific, it can influence households’ decisions to educate girls versus boys. Our econometric results provide evidence that India''s labor markets are characterized by significant uncertainty and that the uncertainty is systematically larger for women. [Copyright &y& Elsevier]