exceeds the corresponding critical values. To summarize, the diagnostics contend that the OLS estimates of returns to schooling for males in the given specification are more preferable over the IV estimates, whereas for females the IV parameters are appropriate.

# **5. Conclusions**

Russia is a highly educated country, and the level schooling continues to increase. More than onethird of the labor force possesses a post-secondary qualification. Our analysis confirms previous studies showing a growth in the overall returns to schooling during the post-transition period (Brainerd 1998; Clark 2003; Vernon 2002). There was an increase in the returns to an additional year of schooling in the 1990s. The returns peaked in the early 2000s (at almost 10 percent) followed by a downward pattern (returns of 5.6 percent by 2018). Note that the global average is about 8-9 percent (Psacharopoulos and Patrinos 2018). The extent to which the declines are due to potential “over-education” is worth investigating (Gimpelson 2019).

Education payoffs for women are higher than those of men, but the difference appears to have narrowed in recent years. The higher returns to education for females is consistent with global findings (Psacharopoulos and Patrinos 2018) and previous studies of the Russian labor market (Cheidvasser and Benítez-Silva 2007; Luk’yanova 2010). When estimated separately by gender, we find trend variation. The results from estimation of earnings functions show that annual returns to higher education for males varied from 9 to 15 percent, whereas women’s returns are described by an inverse U-shaped pattern, reaching their maximum of 28 percent in 2003. Within roughly the last five years, wage premiums to higher education for women have stabilized at around 12 percent, a couple of percentage points ahead of men. Gender-wise enrollment rates in higher education 10 years later appear to match the differences in rates of return, strengthening the hypothesis that market rates of return to education in Russia do indeed influence positively the demand for schooling. Just in the past two years, the enrollment decline appears to be slowly reversing, but this phenomenon needs to be watched more closely to determine if it is merely a fluctuation or a new trend.

We show that private returns to education are three times greater for higher education compared to vocational education. On average, wage premiums to university education in Russia are roughly 3-5 times greater than to vocational schooling. This is consistent with findings from global studies and from previous research on the Russian labor market (Borisov 2007; Carnoy et al. 2012). Higher education enrollment rates increased substantially after the break-up of the Soviet Union (Belskaya, Peter and Posso 2020). Enrollments peaked in 2009. Subsequent returns to higher education started to fall relative to secondary education. The latest estimate of the returns to higher education in the Russian Federation is about 8 percent, which is just below the EU average of about 10 percent and the global average of 15 percent (Psacharopoulos and Patrinos 2018). But the wage profiles for those with secondary and vocational education are almost flat or descending, while the gaps between higher education and vocational education are increasing, in favor of higher education.

Going forward, several policy options and research priorities are worth mentioning. Female education remains a policy priority as it promotes earnings growth and helps reduce gender gaps in the labor market. Maintaining the high level of participation is warranted, while investigating 17