Returns to human capital in a developing country: A pseudo-panel approach for Colombia

Abstract

This article analyzes the recent returns to human capital in Colombia. Using a pseudo-panel approach, the results show a human capital return of 9.7% from 2016 to 2020. Comparisons with previous data show a reduction of approximately 5 p.p. in return on human capital. Our results show the importance of investing in Colombia’s human capital due to the positive externalities compared to other forms of investment in Colombia. Also, we find statistically significant differences between men and women; Around 2 percentage points (p.p.). A more effective public policy is needed to correct these disparities, despite Colombia's public policies such as equal pay for equal work or advances in equal parental leave.