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Júlia Varga Hungarian Academy of Sciences Institute of Economics

The Labour Market Value of Higher Education in the 2000s in Hungary : Effects of the Field of Study and Institution of Graduation. Júlia Varga Hungarian Academy of Sciences Institute of Economics. SEBA – IE CASS - IEHAS Economics of Crisis, Education and Labour

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Júlia Varga Hungarian Academy of Sciences Institute of Economics

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  1. The Labour Market Value of Higher Education in the 2000s in Hungary:Effectsof the Field of Study and Institution of Graduation Júlia VargaHungarian Academy of SciencesInstitute of Economics SEBA – IE CASS - IEHAS Economics of Crisis, Education and Labour Chinese - Hungarian International Conference 30. 06. 2011, Budapest

  2. Motivation • Sharp increase in the supply of higher education graduates • Number of works document how the average return to higher education has changed in Hungary, but very little is known about the causes of differences in labour market success among graduates • Large differences in earnings and employment probability across fields • Wage dispersion of higher education graduates has increased SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  3. 60000 50000 40000 30000 20000 1990 1995 2000 2005 2010 Year Full-time students Total Number of graduates, 1990-2009 SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  4. Wage returns to higher education (%) by level of education (college/university) Based on data of Hungarian Wage Tariff Surveys. Dependent variable: (log) earnings; Control variables: educational categories dummies, gender, experience, experience squared. The percentage effect is (eß–1) × 100 % . N (Total ):190-230 thousands; N ( young): 38-40 thousands SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  5. Research question Does the field of study and the institution of graduation affect early labour market success (earnings and employment probabilities) of graduates? SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  6. Data • Survey of Hungarian Higher Education Graduates 2010 • Representative sample of graduates in 2007 • Sample 10 % of the population of graduates (4507 persons) • 10 fields of study, 25 institutions SSEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  7. Field of study Net monthly earning 000 HUF Employmentrate% Business, economics 159 88.0 Informatics 155 88.6 Law 152 87.4 Engineering 145 85.9 Social 125 86.4 Medicine 122 86.7 Agrarian 120 86.4 Humanities 120 81.9 Science, mathematics 117 72.1 Teacher training 111 83.2 Total 136 85.5 Average monthly net earnings and employment rates by field of study SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  8. Net monthly earnings 250 ppke bme bgf 200 me bmf bme bgf df bce szte elte df pe elte szie zskf 000 HUF 150 me df zskf pte pe de szie szte sze sze nyme pe pte szie bce kjf szte sze nyme me pte ke bmf me elte kre de pe me krf szte kf kf szie nyf de kre pte elte se nyme sze de nyf sze de bce elte ekf elte ppke szte szte szte ekf pte pte de szie de kre szf de nyme pte kjf szte szie de ekf nyme ekf bmf kf nyf nyme nyf 100 pe pte me ke kf szf szte kre de nyf krf ke szte me szie nyf 50 0 Medicine Teacher training Informatics Engineering Social Science Agrarian Humanities Law Field of study Within-field variation in average earnings Business, economics SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011. .

  9. Employment rate 1 zskf bmf kre szie de szie pe pe nyf kjf bce df elte me kjf df kf de elte pte de df szie de bgf bme nyf pte bce sze pte szie pte pte krf nyme zskf nyf sze kf bmf pte krf szte se nyme de ke elte bme szte nyf pte bce pte me szie nyme kre szte kf ekf kf elte me ekf pe de szf kre .8 de me me kre bgf elte ekf ke sze nyme nyf ppke sze de pte me szie elte pe nyme pe ke de nyme szf szie szte szte .6 ppke me de .4 0 Agrarian Humanities Business, economics informatics Law Engineering Medical Teacher training Social Science Field of study Within-field variation in employment probability SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  10. Measurement problems • non-random selection of students into different fields of study and different institutions • more able students are admitted to more selective institutions and fields of study • factors may influence both the choice of field of study and of institution and earnings (abilities) SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011. .

  11. Measurement problems • two methods are used to control for the potential self-selection of graduates • effect of field of study: propensity score matching method, average treatment effect on the treated • effect of institution: HLM-like regressions • with field of study * institution fixed effects SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011. .

  12. Method 1. Effect of the field of study propensity score matching method – average treatment effect on the treated E(Y1|D=1) – E(Y0|D=1) P(X)=Pr(D=1|X)=E(D|X) E[Y1|D=1,P(X)]-E[Y0|D=0,P(X)] D =1 treated: person graduated from the given field of study D=0 control: person graduated from another field of study Y1 – outcome measures (earnings, employment probability) X – observed covariates SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011. .

  13. Method 1. Effect of the field of study Independent variables (observables): Matching methods: nearest neighbor method (ATTND) and stratification method (ATTS) SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  14. Results 1. Effect of the field of study SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  15. Methods 2. Effect of the institution of graduation (i=1….N) (1) (2) from (1) where , qINTt = SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  16. Methods 2. Effect of the institution of graduation (1) Two outcome measures: 1) yi= Net earnings – OLS 2) yi= Employment probability -probit (2) Weighted Least Squares Weights= : inverse of var qINTt estimated from (1) SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  17. Methods 2. Effect of the institution of graduation –step 1 Independent variables SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  18. Methods 2. Effect of the institution of graduation –step 2 Independent variables SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  19. 1 bgf zskf df .5 bme sze bmf Earnings effect pe pte 0 nyf -.5 -2 -1 0 1 Employment effect Results 2. Effect of the institution of graduation XSignificant employment effect Significant earnings effect Both effects are significant SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  20. Conclusions • some fields of studies have casual effect on early labour market success of graduates • earnings of graduates from business and economics and from law are higher • earnings and employment probabilities of graduates from teacher training are lower • no robust effects of the institutions, with the exception of BGF (higher wages, lower employment probabilities) SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

  21. Thank you! SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

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