The Returns to Private Education: Evidence from Mexico

Despite the rapid expansion and increasing importance of private education in developing countries, little is known on the impact of studying in private schools on education and wages. This paper contributes to filling this gap by estimating the returns to private high schools in Mexico. We construct a unique data set that combines labour market outcomes and historical census data, and we exploit changes in the availability and size of public and private high schools across states and over time for identification. We find that attending a private high school does not affect school progression to college nor high school wages but it does positively affect wages conditional on college completion. Results are robust to a number of robustness tests on the validity of the instruments.