CONICET | Buscador de Institutos y Recursos Humanos

We explore the empirical relationship between labor income and educa¬tion in two Latin American countries, Argentina and Paraguay, controlling for socio-economic background. We estimate modified Mincer equations with household survey data, also correcting for selection bias. A first approach showed that the rate of return to schooling is higher in Paraguay, where education is scarcer. When expanding the specification, we confirmed that socio-economic situation does have an important influence on income determination. This result has strong political implications in terms of education financing and reform considering the weakness of the role of education as a mechanism for social inclusion.