There are also important differences in wage levels, especially for individuals who are able to graduate from US and enter higher education. Table 3 presents estimates of relative returns to completing a full course of secondary education, and to entering higher education, with respect to primary. In the case of the relative returns to secondary completion, the most recent data show that with the exception of Guatemala, all Central American countries register higher levels than the Latin America average. However, only Panama and Guatemala –and Costa Rica to a more limited extent—share the regional declining trend in this variable since circa 2000.<sup>14</sup> This suggests that in most of Central America, secondary completion continues to generate substantial income dividends on average, making it costly to leave before completing US.

The relative returns to higher education in Central America show that completing US and continuing to the next level also has substantial economic rewards. In El Salvador, and to a more limited extent Panama, such rewards are substantially larger than what is observed in Latin America. Even though Costa Rica, Guatemala, and Honduras register a declining trend during the 2000s that is more pronounced than the slight reduction in the regional average, returns to this level continue to be significant. In El Salvador and Panama, relative returns to higher education have continued to rise substantially during the past decade.

An interesting result for Central America is that the economic gains of completing US are considerable compared to completing only LS. Figure 12 illustrates this by plotting the difference in average wages at ages 19-24 that result from completing each segment of secondary. For example, when comparing wages for those who only completed primary versus those who completed LS, differences range from only 2, 5, and 6 percent in Nicaragua, El Salvador, and Honduras, to 15 and 25 percent in Guatemala and Costa Rica. However, when comparing the average wages of those who completed US versus those who reached a maximum of LS, differentials go from 22-24 percent in El Salvador and Guatemala, to between 39 and 46 percent in Panama, Nicaragua, and Honduras, and reach 75 percent in Costa Rica.

While average returns to completing US and beyond remain substantial, within each country there may be a wide dispersion of returns that depends on many factors. Individuals who receive a higher quality and more labor-market relevant education, who live in areas with stronger labor markets, who have stronger social networks, and so on, are likely to reap larger rewards from their human capital investment. For example, in Costa Rica, tertiary training graduates receive on average anywhere from _negative_ 6 percent to positive 9 percent returns depending on the institution attended and controlling for individual characteristics (World Bank 2015a). Similarly, Gonzalez-Velosa et al (2015) find that substantial shares of tertiary graduates in Chile and Colombia receive a negative return on their investment, reaching a disturbing 59 percent of graduates from technical and technological institutions in Colombia. This dispersion of returns likely informs young people’s decisions about whether to persist in school, and reflects (at least in part) variation in quality within each country’s education system, an issue discussed further below.

Beyond individual labor market consequences, dropout can have other important consequences. A growing body of evidence primarily from the United States indicates that higher levels of

> 14 Returns to secondary and tertiary completion in Costa Rica rose substantially between 2007 and 2013, potentially reflecting post-crisis improvements in the economy (World Bank 2015a).

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