Returns to Human Capital in Case of Slovakia (Mincerian Approach)

Human capital is undeniable the long run growth determinant, which is according to Mankiw, Romer and Weil (1992) responsible for from 50 till 70 percent of the national income among countries. In this paper we would like to investigate what is the importance of human capital for individuals in Slovak economy. In our case we alter human capital by formal education as the best proxy. Thanks to internship on Institute of Financial Policy of Slovak ministry of finance I had an opportunity to work with unique database The Database of Labour Value ISCP from Slovak Ministry of Social Affairs. This micro dataset allow us to find out what is the real gain from additional year of education and its trend in last 15 years. We use mincerian approach to estimate returns to education by well-known Mincer model (Mincer, 1974) and extend it by available dummy variables to specify clear impact of formal education on future incomes and to compare true wage extras of different levels of schooling in Slovakia. In one chapter we focus on difference in returns to education between men and women.