Evaluating the Impact of Education on Earnings in Nepal

Type Working Paper
Title Evaluating the Impact of Education on Earnings in Nepal
Publication (Day/Month/Year) 2017
URL http://www.internationalseminar.org/XVIII_AIC/TS5B/Hari Gopal Risal_438-454_ _1_.pdf
This study will contribute to the literature of return to education and help policy maker while
allocating the budget in education since education level has caused significant increment in
earnings in context of Nepal. This paper has applied a Semi-log multivariate regression model
using data from Nepal Labor Force Survey to provide empirical evidence in the entire analysis
on this issue. Not just academic qualifications, but also there are several other factors which
cause increase in income. We explore this fact to identify the impact of experience, age, training,
gender and other variables in their earnings. The empirical evidence of this study has shown a
direct relationship between the education and earnings (i.e. Increase in education by 1 level
causes 16% increment in their wages on average). Apart from the academic qualification, their
experiences in the similar field have statistically significant relationship (i.e. 1 level increase in
experience causes 11.57% increase in log monthly earnings). The training dummy is found to be
statistically insignificant to cause increment in earnings which is also an interesting finding of
the study. Due to having the low R-squared value after introducing dummies, we can suggest that
there may be other qualitative factors like ability of individual and the contextual fact that may
cause the increment in earnings, which can be the future scope of this study. Two major
implications of this empirical study are: firstly, this will help policymakers while allocating the
budget in education sector and secondly, encourage people towards higher education.

Related studies