Title: Wage differentials in Sri Lanka: the case of a post-conflict country with a free education policy

Authors: Ajantha Sisira Kumara

Addresses: Department of Public Administration, Faculty of Management Studies and Commerce, University of Sri Jayewardenepura, Gangodawila, Nugegoda, Sri Lanka

Abstract: This study analyses wage differentials in Sri Lanka by the individuals' educational attainment. The wage returns to education are estimated by using a combination of the techniques of ordinary least-square, two-stage least-square, sample-selection, and quantile regression on micro-data of the Sri Lanka Labour Force Survey - 2013. Therefore, the estimates provided by this study are representative of the entire country and corrected for both the endogeniety and the sample-selection biases. The study concludes that education generates a positive impact on private earning. The results show that one additional year of schooling increases the hourly wage rate by 9% approximately. In addition, according to the results, primary and secondary education reduces income inequality among people whereas the bachelor's-degree university education contributes to income inequality. Further, the results relating to the additional controls reveal that the male, urban, and the public sector employees earn relatively higher wage returns.

Keywords: free education; income equality; household surveys; instrumental variables; micro-data; quantile regression; returns; sample selection; Sri Lanka; wage rates; wage differentials; post-conflict countries; educational achievement; earnings; primary education; secondary education; university education; higher education.

DOI: 10.1504/IJEED.2015.075796

International Journal of Education Economics and Development, 2015 Vol.6 No.4, pp.343 - 365

Received: 03 Dec 2015
Accepted: 14 Dec 2015

Published online: 05 Apr 2016 *

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