the possible endogeneity of the schooling measure and instrument it appropriately. This gives a higher return to female education, but almost no change for men. On average, in Russia, an additional year of education provides a relatively small – and declining – increase in wages.

In the next section we provide a brief overview of the literature with a focus on Russia. Section 3 describes and analyzes the RLMS data used in this study. Section 4 presents the empirical results and Section 5 offers some conclusions.

# **2. Literature Review**

In a worldwide perspective, the latest findings on returns to education can be condensed to the following (Psacharopoulos and Patrinos 2018): (1) overall, an increased share of workers with tertiary education in the labor market has not reduced the magnitude of returns on the investment due to “skill-biasedness” of technological progress boosting the demand for higher skills; (2) lowand middle-income regions are characterized by the largest returns (except for the Middle East and North Africa, with the lowest returns); (3) the private returns to education for women outstrip those for men by roughly two percentage points; (4) private sector employees receive greater returns than those working in the public sector; (5) social returns to education are negatively associated with a country’s level of economic development and education level; and (6) on average, there is a growing trend in returns to higher education.

A small corpus of the research on returns to education has focused on the Russian/USSR case. In the USSR, during the period before education reforms, the private rate of return to schooling was strikingly low: 2-3 percent for secondary and 5 percent for higher education levels (Graeser 1988). Low returns to human capital were in line with a planned economy offering free education, centralized allocation of labor, and the ideology of the dictatorship of the proletariat; a similar picture was observed in other contemporaneous socialist countries (see, for example, Münich, Svejnar, and Terrell 2005).

However, an even earlier attempt to establish the contribution of education to productivity took place during early Soviet times. Strumilin (1924) showed that those who were more educated contributed more in terms of productivity. He even calculated earnings benefits, and though his calculations did not discount earnings, the estimates of educational returns were high, at about 17 percent in 1919 (Strumilin 1924).

Within the first two decades of the collapse of the Soviet Union, a group of scholars reported that during the transition period from a planned to market economy in Russia rates of returns to schooling rose sharply (Brainerd 1998; Clark 2003; Vernon 2002; Akhmedjonov 2014). The upsurge in wage premiums to education (especially university education) was asserted to be a pivotal factor that exacerbated wage dispersion: salaries of highly skilled and trained workers had increased in absolute terms and compared to less-educated workers (Fleisher, Sabirianova, and Wang 2005). However, returns to schooling declined for those people who took advantage of higher education expansion in a post-communist Russia (1990-2005) in comparison to youths who obtained university degrees in the preceding periods (Kyui 2016). One researcher exploited data about the average education level at the end of a Soviet period as an instrument and inferred that the growth in the proportion of city dwellers with university degrees was associated with a rise in 4