Exploring Educational Attainment and Returns to Education in Select Transition Economies

This dissertation brings together evidence on educational attainment in Bulgaria, Kyrgyzstan and Tajikistan and returns to education in Bulgaria, and explores schooling investment decisions through a qualitative study in Bulgaria. I extend the existing literature to transition economies and examine the trends in the context of countries' exposure to economic crisis years. Using intergenerational regressions and correlations of educational outcomes of children aged 16 to 20 in relation to parental education, I find that the correlation between children's and parents' education is positive and significant, supporting the earlier findings of the intergenerational mobility literature. I show that exposure to crisis coincided with changes in educational attainment for certain groups of children depending on parental education in Bulgaria and Tajikistan, and an appreciable gender gap in terms of persistence of educational outcomes in Bulgaria. With the grade-for-age trajectories, I demonstrate an increasing attainment gap between the children of poorly-educated parents compared to those of more highly-educated parents for children 12 years old and above. In the second part, I extend the previous work on returns to education by providing a comprehensive examination of the trends for women and men; different levels of education; and workers at different quantiles of the wage distribution to illustrate which groups are lagging behind in labor market outcomes. Estimating various specifications of the Mincer equation, with ordinary least squares and quantile regressions, I find that while average returns to education increased in Bulgaria in line with the international trends in returns to education, this period was also characterized by a greater disparity in returns to education between workers in lower and higher end of the quantiles of the wage distribution, as well as for different levels of education. In the last part, I explore what factors influence households' decisions to invest in children's education using qualitative data collected through fieldwork in Bulgaria in 2005. In line with the theoretical framework for schooling decisions, the interviews highlighted the importance of returns to education, ethnic background, gender and social capital in schooling investment decisions. They also revealed other possible factors, such as children's ability and quality of schooling.