DOES SCHOOLING REFORM AFFECT THE RETURNS TO EDUCATION IN MALAYSIA?
Keywords:Human capital, instrumental variables, rate of return to education, Labour economics.
The objective of this paper is to examine the impact of education reforms on earnings. One of the significant changes in the Malaysian education system was the school reform of 1970 that changed the medium of instruction from English language to the Malaysian national language. Using data from the household income surveys, this paper updates previous estimates of the private rate of return to schooling. Applying a homogenous return model, an ordinary least square (OLS) regression indicates that the private rate of returns to schooling is about the world average. Meanwhile, using instrumental variable approach, the impact of the schooling reforms indicates that the private rate of return to education is higher than the average.