Return To Education In Algeria

The earning function presented by Mincer (1974) has been largely used to estimate the private rate of return to education in developed and less developed countires alike.However, this approach is a matter of many criticisms from different aspects.Some researches focus on the problem of endogenety of education and others on the measurement error of education variable.But the bias of the rate of return due the measurement error of experience variable has not been given much importance. The present paper tends to estimate primarily the private rate of return to education in Algéria using a random sample of employees in tow different regions in the country;Tlemcen in the north and Adrar in the South.In this stage, estimates are based on the OLS method.Results show that the rate of return is 7,2 per cent (6,4 per cent for males and 9,5 per cent for females). Then, the potential experience in the earning function will be replaced by the effective experience. The main finding is tha the rate of return decrease by about one per cent .Finalyy, in order to correct bias of the rate of return due to OLS method, we will use father education as an instrumental variable .