The Wage Effects on Education: An Analysis by Gender in Indonesia

Human capital embraces the notion that individuals acquire skills and knowledgeto increase their value in labour market. Experience, training, and education arethree main mechanisms for acquiring human capital, with education beingprimary for most individuals. The estimated coefficients reveal that the effect ofeducation on earnings is larger as education level increases. The return touniversity education is highest return among other level of education, while sub-primary education is the lowest rate of return to education of male and femaleworkers. Since levels of education contributes and have a positive impact onearning for male and female workers during 1989-2009, there are several reasonsthat can explain thisevidence such as increasing in school enrolment, scarcity ofskill workers, increasing number of education institution, and impose law ofcompulsory basic education