12 by the Mexican Government in the latter half of the 1980s. They are especially suitable, therefore, for making 'before and after' comparisons.

The ENIGH surveys identify the educational attainment, income received and number of hours worked per week by each family member.'<sup>0</sup> Income is differentiated into about 25 items, which were aggregated into three broad categories: (i) wage and salary income, (ii) current monetary income, which includes wages and salaries, income from self-employment, property income and rents, monetary transfers and income from financial assets, and (iii) total current income, which includes all of the above items, plus non-monetized income such as imputed rent, in-kind transfers and stock dividends. In contrast to this disaggregation of income sources, the ENIGH surveys do not differentiate the number of hours worked per week by activity. The rates of return calculated below are based on two measures of earnings per hour: the wage rate, which refers to wage and salary earnings per week, divided by the total number of hours worked per week, and the monetary earnings rate, which refers to current monetary income divided by the same number of hours worked per week.

Tables 5 and 6 present the private and the public rates of return on investments in education in Mexico. The method used to estimate these rates of return is explained in detail in the Annex. The distinction between public and private rates of return in this context centers around who bears the cost of financing the investment in education: in both cases, the benefits of an additional year of schooling are reflected in the stream of additional earnings that accrue to an individual as a result of that additional education. The rate of return to education is then the discount rate that equates the present value of this stream of additional earnings to the present value of the costs incurred. When only private costs are considered in this calculation, it is tenned the private rate of return, and when all public and private costs are considered, it is termed the social rate of retum.

**Table 5: Private Rates of Return to Schooling in Mexico**

(Private cost of education is 100% of foregone full year's earnings; KP = 1.)

||Wage|Earners|Monetary Inco|me Recipients|
|---|---|---|---|---|
||1984|1994|1984|1994|
|Average "Mincerian"<br>_by schooling level_|15.2%|16.7%|<br>14.6%|17.2%|
|1 - primary complete|16.9%|13.8%|14.7%|14.3%|
|2 - secondary complete|13.9%|16.7%|14.5%|16.0%|
|3 - preparatory complete|_15.5%_|18.2%|14.4%|19.2%|
|4 - university and above|10.3%|19.9%|12.8%|20.6%|

Source: Tables Aland A2, using the method described in the Annex.

°Several sources of potential bias in the data base require attention: first, casual evidence indicates that the sample of families included in the ENIGH surveys is truncated in that the very rich and the very poor appear to be underrepresented. Indigenous groups, which are estimated at around 1o percent of Mexico's population, also appear underrepresented. Finally, there appear to have been some sampling problems involving the 1984 survey (the first year the survey was conducted by INEGI), which may have affected its comparability with the 1994 survey.