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Title:Higher level manpower development in Indonesia: Rates of return and embodied technical change
Author(s):Bishry, Rony Mamur
Doctoral Committee Chair(s):McMahon, Walter W.
Department / Program:Economics
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):History, Asia, Australia and Oceania
Economics, Labor
Sociology, Industrial and Labor Relations
Abstract:This study consists of basic research on rates of return to higher education in Indonesia. Four different techniques to estimate rates of return are employed: the pure internal rate of return, the Mincer earnings function, the Cobb-Douglas production function, and the nested-CES production function. Several topics relating to rates of return to higher education in Indonesia are also discussed. They include background comparisons of education and research and development in Indonesia, Korea, and Taiwan; embodied technical change; consistency among the four different techniques used to estimate rates of return; diffusion of technology; and policy implications. Further, the estimates of capital stock (both human and non-human) in Indonesia are carried out in this research.
Both micro cross-sectional data and macro time-series data are used in this study. The micro data were obtained from the 1982 SUSENAS (social and economic survey) and the 1987 SAKERNAS (labor force survey). The macro data cover the period from 1960 through 1986.
First, we employ the Mincer earnings function where schooling and experience are regressed on earnings using the 1982 and 1987 micro data. In the first regression using 1982 data, earnings obtained from primary job are considered. The second regression adds earnings from additional non-primary jobs. In order to employ the pure internal rate of return analysis, the data set is disaggregated by occupation (engineers, scientists, managers, social scientists, educators, and other) and by employment status (private employer, military and government (non-civil service), (private and public employee, farming (employer), and other). Rates of return are then individually estimated for different categories. Rates of return are also estimated from the Cobb-Douglas and the nested-CES production functions.
The results of this research indicate relatively high rates of return to higher education in Indonesia (between 6% and 19%), except for the estimates derived from the nested CES model (-1%). For investment strategy, note that real interest rates were only between 3% and 6% in 1982. Continuous estimates of rates of return should be carried out in order to detect changes in the rates over time. Failure to keep abreast of the rates of return to various forms of investment may cause serious inefficiency of government investment strategies.
Issue Date:1990
Rights Information:Copyright 1990 Bishry, Rony Mamur
Date Available in IDEALS:2011-05-07
Identifier in Online Catalog:AAI9026141
OCLC Identifier:(UMI)AAI9026141

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