Higher levels of education for higher private returns: New evidence from Malaysia

This study provides new and more accurate information about private rates of return to education (RORE) in Malaysia. Most of the prior studies on RORE have not addressed selectivity bias, and those that have are based on an older data set. The findings suggest that for both males and females, the average private returns to education are highest at the secondary (16.5 percent and 27.2 percent, respectively) and university (15.5 percent and 16.1 percent, respectively) education levels. Thus, it is important to pursue education until the secondary level and further to the university level to capture higher returns to education.

► In Malaysia, returns to additional years of schooling are a non-linear function. ► Private returns to education are highest at the secondary and university levels. ► Female returns to education are higher than male at the higher levels of education. ► High returns to education in Malaysia even after controlling for kind of work. ► At higher levels of education, returns are greater for rural male workers.