Whither human capital? The woeful tale of transition to tertiary education in India

Abstract

In this article, we examine the issue of high dropout rates in India which has adverse implications for human capital formation and hence for the country's long-term growth potential. Using the 2004–2005 National Sample Survey (NSS) employment–unemployment data, we estimate transition probabilities of moving from a number of different educational levels to higher educational levels using a sequential logit model. Our results suggest that the overall probability of reaching tertiary education is very low. Further, even by the woeful overall standards, women are significantly worse off, particularly in rural areas.

Keywords:

• educational attainment
• sequential logit
• transition probabilities; India

JEL Classification:

• I21
• C13

Acknowledgements

The authors thank the Indian Institute of Management at Kolkata for the financial support. The authors are responsible for all the remaining errors.

Notes

¹ Anecdotal and other evidence suggest that there were significant inter-generational changes in educational attainment after independence, especially in rural areas. We therefore feel that the use of this second best measure of educational environment does not affect our estimations significantly.

² Our measure of educational environment and control for location assumes that there is little intra-country migration, and this is consistent with the 2001 census data (http://censusindia.gov.in/Census_And_You/migrations.aspx). The census data suggest that while 30% of the population had migrated from their place of birth, 84% of these migrants had moved within the same state and 70% of these intra-state migrants had moved within the same district.

³ Note that the product of 0.59, 0.70, 0.53, 0.49 and 0.47 is 0.0504. The other probabilities are similarly obtained.