Average and Marginal Returns to Upper Secondary Schooling in Indonesia

This paper estimates average and marginal returns to schooling in Indonesia using a non-parametric selection model estimated by local instrumental variables, and data from the Indonesia Family Life Survey. The analysis finds that the return to upper secondary schooling varies widely across individual: it can be as high as 50 percent per year of schooling for those very likely to enroll in upper secondary schooling, or as low as ?10 percent for those very unlikely to do so. Returns to the marginal student (14 percent) are well below those for the average student attending upper secondary schooling (27 percent).