The Impact of School Quality on Earnings and Educational Returns

The expansion of education has been widely adopted as a key element in the development strategies of low-income countries. While there is substantial evidence on the benefits of greater educational attainment for subsequent labor market earnings, empirical evidence on the role played by school quality is scarce. This paper combines household survey data with unique data on school quality, from Honduras, to study the importance of school quality as a determinant of earnings. Our objective measures of school quality capture teacher training, school infrastructure and school crowding. The results diaplay strong positive effects of school quality on earnings and on educational returns. These effects persist across a variety of model specifications.