Returns to education in heterogenous labour markets: The case of Peru

Our findings confirm significant positive returns to education overall, particularly at the tertiary level. We also find that while own-account and informal workers earn significantly less on average; returns to education vary by education level and sector. At the pri­mary and secondary levels of education, returns are higher among informal and own-account workers, while at the post-secondary non-tertiary and tertiary levels, returns are higher in for­mal employment. Among own-account workers, returns at the tertiary level are comparable to those of salaried workers. These findings suggest that improving educational outcomes alone is not sufficient; targeted policies are also needed to expand formal, high-productivity employ­ment, strengthen school-to-work transitions, and enhance the earning potential of workers in informal and own-account roles.