Education and Income: A Comparative Study about Returns on Schooling in the State of Goias and the Federal District

Abstract

The purpose of the present study is to analyze the role of education in determining individuals’ salaries, using information from the State of Goias and the Federal District as an example. This work starts with the hypothesis that higher levels of education contribute to more income for the individual. In addition to schooling, various other socioeconomic variables were included in the model, such as sex, color, and union status, in order to reduce distortions that could affect the model. The sample was selected from the 2009 PNAD (National Survey by Household Sample) and consists of a total of 10,371 individuals that declared to have income, 6,359 being from the State of Goias and 4,312 from the Federal District. Thus, the returns to income were estimated based on the Mincer wage equation of the salaries. The results indicate that, in both units of the federation, the impact of education on income increases with the level of schooling and prevails over other variables included in the model.

Keywords: Education economics. Human capital, Return to income.