Returns to Education During Economic Boom and Recession: Mexico 1984, 1989 and 1992

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Abstract
This paper uses data from three household surveys in 1984, 1989 and 1992 to investigate the relationship between earnings and education in Mexico. The time series feature of the data allows us to assess how the returns to education behave in a country that experiences macro-economic ups and downs. The results indicate that the returns to an investment in education are depressed during an economic recession and rise again as economic growth resumes. Also, the returns to education remain high, even after a significant expansion of the educational system. In terms of investment priorities at the margin, secondary education exhibits the highest profitability. This is natural, given the near-universal coverage of basic education in Mexico.

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