Does More Education Always Mean Higher Earnings? Evidence from Bangladesh

Abstract

Essentially championed by the human capital theory, it is a widely accepted notion that the higher an individuals’ education level, the more likely they are to earn. However, is this true in the case of different groups of individuals across the type of education pursued, gender, and whether an individual grew up in a rural or urban area? This paper explores this question and tests whether there is a significant increase in earnings for every additional education level in the case of six particular groups of individuals: Individuals who studied in the general education stream, individuals who studied in the religious education stream, males, females, those who grew up in urban areas and those who grew up in rural areas. Using nationally representative data and ordinary least-squares estimation, this paper finds that individuals who studied in the religious stream and, in some cases, females, do not necessarily experience increased labor market earnings with an increase in their education level. Speculating on possible reasons behind these findings, I argue for criticalities and nuances to be better considered when assessing the change in earnings across education in a particular context.