Inter-Generation Returns to Education in Malaysia

This article aims at analising inter-generation returns to education among intergeneration in Malaysia. The analysis shall focus on two main generations, i.e. the parents and their children. Data for this study are gathered from UKM’s Mainstream Research Project 2010 entitled ‘Impact of Globalisation on Malaysia’s Labour Market Structure’. Three econometric models are formulated based on Mincer schooling model (1974) to analyse inter-generation rate of return to schoolings in Malaysia. The dependent variable is the logarithme of workers’ monthly wage while the independent variables are years of schooling, working experince, generation status, gender, race, occupation sector and residential location. All the three models are estimated using Ordinary Least Square (OLS) method. The result shows that all independent variables significantly influence wages. Notwithstanding this, the rate of return to schooling for mothers (11.40%) is the highest compared to fathers (11.29%) and children (8.98%). This means that returns to education for the first generation (parents) is higher than that for the second generation (children). The result implies that the government should create more jobs especially at professional and high technology levels for the second generation which is in accordance with the national vision to transform the economy towards a high income country.