The Impact of Education on Wages: Analysis of an Education Reform

In 1997 Turkey passed a law making middle school completion compulsory, increasing the mandatory education from 5 to 8 years. At the time of this policy change, only 3-in-5 students were completing middle school in Turkey. In this paper, I investigate the effect of this law on educational attainment, the impact of the increase in education on wages, and explore how this varied across individuals. My results indicate that the fraction of children completing middle school increased more than 20 percentage points as a result of this reform. The effects were especially pronounced for girls (particularly those living in rural areas): I estimate that as a result of the reform, an additional half a million girls attained a middle school diploma. There are also considerable spillover effects into high school completion rates. Despite the large policy-induced increase in educational attainment, I find little evidence of a corresponding increase in labor force participation or full-time work. The results suggest large wage gains of about 14 percent per year of schooling, with these benefits concentrated among females. Taken together, my findings demonstrate that the policy change induced a dramatic change in educational attainment among the youth of this predominantly Muslim developing country, but that the economic benefits of the change were limited to women