Impact of Education on Compensation in the Russian Economy

Abstract:

In the article, the authors have constructed the econometric models of the dependence of salary of individuals from various indicators of education. To estimate the return on investment in human capital at the micro level, we chose the natural logarithm of the average monthly salary as the dependent variable. As explanatory variables, the following variables were used: gender, age, marital status, number of children, parents’ education, level of education in relation to school education, number of years of study, profession, industry, prestige of work, need for a diploma for work, bonuses, number of work hours per week, and region. The necessary data were taken from the base of the Russia Longitudinal Monitoring Survey — Higher School of Economics (RLMS-HSE). Based on the results of testing the model, we confirmed the hypothesis that the well being of an individual largely depends on education. In addition, the socio-demographic variables and labour market variables have a significant impact on the level of salary. As a result, the authors have concluded that investment in education has a significant impact on the welfare of an individual, but the greatest contribution is made by socio-demographic variables.