Journal of Educational and Management Studies  
J. Educ. Manage. Stud., 10(2): 22-29, June 25, 2020  
License: CC BY 4.0,  
ISSN: 2322-4770  
Estimate Private Rate of Return on Technical Vocation School  
and Formal School: Evidence from Kuwait  
Humoud A. Alqattan  
HIE, PhD, Training Staff, PAAET, Kuwait  
Email: ha.alqattan@paaet.edu.kw  
ABSTRACT  
Original Article  
In this paper we asked what can account for the continuing provide technical vocational  
education in Kuwait? Where the level of development is high and there are high wages  
PII: S232247701800003-8  
government jobs. On the other hand the researcher try to find which of education system  
track, formal or technical vocation education system is more profitable for individuals in  
Kuwait. We argue that the answers to these questions are connected through the nature of  
the earning function and the importance of age effects. This paper will be complemented by  
Rec. 14 April, 2020  
Acc. 14 May, 2020  
Pub. 25 June, 2020  
an important gap in the development of tools and techniques for analysis part of the  
education system in the State of Kuwait. This paper is important from three standpoints.  
First, in order to estimate the effect of education track/path on earnings, the most recent  
and nationally representative data is used which provides detailed information on the  
variables. Second, it is an effort to provide an evidence for the comparison between  
Vocational track/path and Formal track/path in Kuwait education system based on  
individual earnings. Third, this study provides the policy makers with a helpful technique to  
monitoring the expenditure on education. To provide policy makers and top management  
with information needed for comparing technical vocation education with formal education  
system in Kuwait, this paper offer a new evidence on continue providing technical vocation  
education in Kuwait by using 2010 Kuwait Civil Service Commission employees database;  
moreover it is an effort of estimating the private rate of return on formal and technical  
vocation education system by applying the earning equation. The results suggested keep on  
offering the technical vocation schools also; find a significant effect on wages depend on the  
type of education track system. Moreover, the technical vocation education slightly higher  
returns than the formal education.  
Keywords  
Kuwait education,  
Private Rate of Return,  
Rate of Return on Education,  
Rate of Return on Technical  
vocation,  
Earning equation,  
Mincer equation  
is needed. In order to conduct the process of  
development in Kuwait towards the achievement of  
its aims, great interest and emphasis should be placed  
on study of human capital investment accumulation.  
This study will be complemented by an important gap  
in the development of tools and techniques for  
analysis part of the Education system in the State of  
Kuwait. Furthermore, there is a need for more  
evidence to study the impact of education on earning.  
Based on the aim of this paper we generate these  
questions:  
INTRODUCTION  
The estimate of the return on investment in education  
is of great importance for the strategic planning of  
education and for decision makers in public and  
Steinmeier, 1981). Education has values for both social  
(public) and private (individual) economists  
traditionally use the rate of return on education to  
understand household decision, also to assist the  
education policy maker in the planning stage. A  
positive return encourages the household investment  
in education because they may desire for return to  
exceed the returns from alternative investment  
(Sakellariou, 2003). In this paper we are focusing on  
the private rate of return on education where the  
available information relating to education return in  
Kuwait is currently limited, and according to  
countries more research on the benefits of schooling  
What we mean by the rate of return to  
education?  
How rates of return are actually calculated in  
practice?  
How rates of return might be useful for  
policy-makers?  
How can we compare the RORV with RORF?  
To tackle the above questions we crate three  
objectives:  
To cite this paper: Alqattan H.A. (2020). Estimate Private Rate of Return on Technical Vocation School and Formal School: Evidence from Kuwait. J. Educ. Manage.  
22  
J. Educ. Manage. Stud., 10(2): 22-29, 2020  
will facilitate a better understanding of the results of  
To review and examine the past research  
this paper. Since, the focus of this paper is on the  
labor who’s graduated from Kuwait high school  
(formal and technical vocation); this review has been  
confined to Kuwaitis employees only.  
efforts in the area of the rate of return models in  
education  
To adopt a model with equation those  
provides the uniqueness of Kuwait economy and offer  
estimation for the RORV/RORF in Kuwait.  
Public education system in the State of Kuwait  
offers a number of different tracks for the different  
needs of young people (AL-essa et al., 2007). General  
education begins with Kindergarten for 4 to 5 year  
olds and progresses through Primary, Intermediate  
and Secondary. General education is provided in  
formal schools, Arabic private schools and schools of  
Religious education. International private schools  
offer courses based on the curriculum of their  
country. Other programs of education are available in  
schools of special needs education, Such as adult and  
literacy education. Technical vocation training is  
offered in PAAET (Public Authority of Applied  
Education and Training) and Tertiary education is  
offered in Kuwait University, and the Institutes of  
Arts and Music studies, the ministry of higher  
education licensed new private higher education  
universities such as the American University of  
Kuwait, Gulf University for science and Technology  
and Kuwait Maastricht Business School, etc. A map of  
the secondary education opportunities available to  
young people in Kuwait is shown in Figure 1.  
To provide policy makers and top  
management with information needed for comparing  
technical vocation secondary schools with formal  
secondary school system in Kuwait.  
This paper seeks to expand our knowledge in  
two ways. First, account the private return benefits of  
technical vocation and formal education using 2010  
individual data for Kuwaitis. Second, the paper sheds  
light on the impact of age and more experience on  
technical vocation and formal earning. Kuwait  
background presented in section 2; the modeling  
approach that we chose to take an earning function;  
where it is a briefly explain in section 3 and 4 together  
with a detailed data description which are taken from  
Kuwait Civil Service Commission; the result of the  
RORE/RORV are presented in section 5; summery and  
conclusions presented in section 6.  
METHODOLOGY  
Before we proceed further, let us briefly review  
the Kuwait education system and labor market this  
Secondary (since,  
literature and  
religions)  
Kindergarten  
Primary  
Intermediate  
Post-Secondary  
Technical vocation  
Figure 1. Track/Path of the education opportunities available to young people in Kuwait.  
The data for this research is drawn from the  
Kuwait Civil Service Commission database (Kuwait  
Civil Service Commission database, 2010.). The Civil  
Service Commission database comprises 43 ministries  
and administrations, and covers about 95 percent of  
all public sector employees. The Civil Service  
Commission data has 12508 observations of  
secondary formal school qualification employees and  
195 observations of technical vocation school  
qualification employees. We have used the data from  
the year 2010 for this research, which is the most  
recent data available.  
In this study the researcher uses only four  
variables, earnings, type of schooling, ages and years  
of experience. We select the dependent variable is the  
log of monthly the basic earnings because it is a  
significant part of the total earnings as well as to  
ignore any argument could be made in favor of using  
just basic salary as the dependent variable rather than  
total earnings A.1 Appendix shows the government  
pay scales, Three independent variables are used in  
this study, namely; formal/technical vocation  
education, years of experience and ages. These have  
been taken directly from the database without any  
23  
Alqattan, 2020  
adjustment. The mean, median, maximum, minimum,  
formal/technical vocation Schools; following the  
standard deviation and other statistical variables for  
the sample data of formal/technical vocation  
schooling basic earnings, ages and years of experience  
are reported in Tables 1 and 2.  
Table 1. Statistics of Kuwaitis employee hold  
secondary formal schooling qualification  
Items  
Age  
Basic Salary  
Experience  
Model  
The human capital model of Becker (1962) and  
Mincer (1974) has been the method used for the study  
present in this paper. Human capital theory views  
education as an investment decision. The earning  
functions have been well applied on individual  
countries’ data, with the semi logarithm specification  
being very robust in empirical studies. Figure 2 briefly  
review and explain the earnings model or (Mincerian  
model).  
Mean  
Median  
38.2  
38  
73  
19  
7.6  
0.1  
2.7  
79.0065  
249.2  
216  
1650  
110  
105.2  
1.9  
16.1  
12.1  
12  
53  
0
8.3  
0.4  
2.3  
610.012  
Maximum  
Minimum  
Std. Dev.  
Skewness  
Kurtosis  
Jarque-Bera  
97029.04  
Probability  
Sum  
Sum Sq. Dev.  
Observations  
0
0
0
477642  
720721  
12508  
3117104  
1.39E+08  
12508  
151306  
857852.9  
12508  
Mincer (1974) used the first human capital model  
which was basically focused on the earning function  
2
LnWi 1Fi 2Vi 1 Ai 1Ei 2 Ei i .......... .(eq.1)  
Table 2. Statistics of Kuwaitis employee hold technical  
as shown in eq.1  
vocation schooling qualification  
Where:  
Age  
Basic Salary  
Experience  
Ln W: is the natural Log for wage (basic salary in  
our case).  
Mean  
32.3  
30  
262.4  
240  
10.3  
9
F: is the formal schooling.  
V: is the technical vocational schooling.  
E: is the experience years.  
A: is the Age.  
Median  
Maximum  
Minimum  
Std. Dev.  
Skewness  
Kurtosis  
59  
520  
36  
23  
135  
0
7.3  
68.3  
1.2  
7.0  
that have impact on earning but were excluded from  
model.  
We realized here that β1 is the coefficient for the  
formal schooling and β2 is the coefficient for the  
technical vocation schooling which is the estimated  
returns.  
Subsequent to the above regression and to estimate  
the proportion of the variance in earnings that is  
attributable to human capital, we regressed separate  
regressions of earnings on schooling for various  
graduation groups get their qualification from Kuwait  
1.6  
1.3  
5.9  
4.4  
5.3  
Jarque-Bera  
Probability  
Sum  
154.8  
0
59.0  
0
97.2  
0
6289  
10462.7  
195  
51162  
904509.4  
195  
1999  
9600.7  
195  
Sum Sq. Dev.  
Observations  
Years of  
Experience  
Error or disturbance term  
representing other forces which  
may not be explicitly measure  
Earnings  
(basic salary)  
Ages  
Formal or  
Technical  
Figure 2. Illustrate of the Earning model (Source: Author’s findings)  
24  
J. Educ. Manage. Stud., 10(2): 22-29, 2020  
Table 4. The formal school regression model  
estimation  
RESULTS AND DISCUSSION  
Appling the regression model (eq.1) for the all data  
using least square method by Eviews package. The  
resulted estimated regression model is as follows:  
t-Statistic  
Prob.  
Variable  
Coefficient Std. Error  
C
4.7  
0.0086  
0.00025  
0.00056  
547.43 0.0000  
22.15 0.0000  
90.966 0.0000  
-23.35 0.0000  
A
0.0056  
0.051  
Estimation Equation:  
LOG(B) = C(1)*F + C(2)*V + C(3)*A + C(4)*E + C(5)*E^2  
E
E^2  
-0.00045 1.91 E-05  
The average regression for eq.1 estimation  
reported in table 3 a negative sign for the square term  
which proofs the impact of over experience. The rate  
of return to formal schooling 4.7 percent and the rate  
of return to technical vocation schooling 4.9 percent  
corresponding t-value and R2 are highly significant.  
R-squared  
Adjusted R-  
squared  
S.E. of regression  
Sum squared resid 300.083  
Log likelihood  
F-statistic  
Prob (F-statistic) 0.000000  
0.84  
0.84  
0.155  
Mean dependent var 5.44  
S.D. dependent var 0.39  
Akaike info criterion -0.89  
Schwarz criterion -0.89  
5579.75 Hannan-Quinn criter. -0.89  
21721.73 Durbin-Watson stat 1.44  
Substituted Coefficients:  
LOG(B) = 4.7*G + 4.9*V + 0.0055*A + 0.051*E - 0.00045*E^2  
Source: Author’s  
Table 4 shows the estimation of formal school  
regression model for 12508 employees the  
corresponding t-value and R2 are highly significant.  
Table 5. The technical vocation school regression  
model estimation  
t-Statistic  
Variable  
Coefficient Std. Error  
Prob.  
Substituted Coefficients:  
LOG(B) = 4.7 + 0.0056*A + 0.0511*E - 0.00044*E^2  
(eq.2)  
C
5.11  
0.07  
76.31  
0.0000  
A
E
0.0023  
0.041  
0.003  
0.004  
0.84  
0.40  
11.44  
0.0000  
Table 5 shows the estimation of formal school  
E^2  
-0.00043  
0.000102  
-4.26  
0.0000  
regression  
model  
for  
195  
employees  
the  
corresponding t-value and R2 are highly significant.  
R-squared  
0.805  
Mean dependent var  
S.D. dependent var  
Akaike info criterion  
Schwarz criterion  
5.54  
0.244  
-1.59  
-1.52  
-1.56  
1.91  
Adjusted R-squared 0.801693  
S.E. of regression  
Sum squared resid  
Log likelihood  
0.11  
2.23  
Substituted Coefficients:  
LOG(B) = 5.11 + 0.0023*A + 0.041*E - 0.00043*E^2  
(eq.3)  
159.17  
Hannan-Quinn criter.  
Durbin-Watson stat  
F-statistic  
262.43  
0.000000  
Table 3. The average regression model estimation  
Prob (F-statistic)  
Source: Author’s  
Variable  
Coefficient Std. Error t-Statistic  
Prob.  
Based on the above tables we can conclude that:  
- The rate of return on formal secondary  
schooling 4.7 percent.  
- The rate of return on technical vocation  
secondary schooling 4.9 percent; corresponding  
- A negative sign for the square term which  
proofs the impact of over experience.  
G
4.7  
0.0085  
551.16  
0.0000  
V
A
E
4.9  
0.013  
369.60 0.0000  
0.0055  
0.051  
0.00025  
0.00056  
21.81  
91.86  
0.0000  
0.0000  
- The Age of individual is not significantly  
affecting the wages\earnings.  
E^2  
-0.000448  
1.89E-05  
-23.77  
0.0000  
*t-value and R2 are highly significant.  
R-squared  
0.84  
0.84  
Mean dependent var  
S.D. dependent var  
Akaike info criterion  
Schwarz criterion  
5.44  
0.38  
These empirical findings raise several important  
questions. The results indicate that significant rates  
of return on both education systems in Kuwait are  
positive and technical vocation slightly higher than  
formal, In addition, coefficient of Age insignificant.  
Also, there are several possible explanations for this  
finding. First, the government pay scales are  
determined largely on the basis of the number of  
Adjusted R-squared  
S.E. of regression  
Sum squared resid  
Log likelihood  
0.155  
303.85  
5685.73  
1.44  
-0.89  
-0.89  
-0.89  
Hannan-Quinn criter.  
Durbin-Watson stat  
Source: Author’s  
25  
Alqattan, 2020  
years of schooling with little consideration to the area  
of specialization. Second, the average education of  
women in Kuwait is higher than that of men.  
There are number of future research direction  
could be studied for instance, the influence of  
education in the choice of sectors and other decisions  
taken after school should be taken into account when  
one studies the full benefits brought by education to  
an individual, the effect of selecting secondary level  
track on higher education and the influences of  
technical vocation education on labor market.  
CONCLUSION  
Education is one of the many investment decisions  
motivated by the fact that the investment yields a  
choice that one would not otherwise have. Part of the  
return to the investment is to be found in the set of  
options that emerges. For instance, when an  
individual decides upon the education track to be  
attained, it is believed that such academic  
qualification will lead to a better-paid job. That  
qualification will also extend the number of options in  
other matters, as well, such as the sector and/or  
specific firm where the individual will be employed.  
Part of the individual’s return to education will thus  
be the return to subsequent choices that are available  
only after qualification is obtained.  
Acknowledgements  
The author grateful to the editor of this  
conference, and would like to thank Dr. Bachir Talibi  
for this helpful comments and assistance. The author  
is responsible for remaining errors.  
REFERENCES  
Gustman, A. L., & Steinmeier, T. L. (1982). The relation  
between vocational training in high school and  
economic outcomes. NBER Working Papers 0642,  
National Bureau of Economic Research, Inc. ILR Review,  
Based on the findings of this paper the researcher  
can conclude that, Kuwait vocational education  
system at the secondary level has successfully  
addressed the needs of the market/industry, better  
match between skills acquired in school and the  
industry will expected to accelerate the school-to-  
work transition, better match of vocational skills and  
industry needs would increase the expectation that  
the labor market will reward vocational skills better  
than general education (other factors remaining  
unchanged) and the important observations is that  
the rate of return on technical vocation education  
slightly higher than the rate of return on formal  
education, however this finding is inconsistent with  
the findings of many other researchers (Gustman and  
Ziderman, 2003), but it is counterpart with other such  
Worswick (2003) for Thailand.  
36(1),  
73-87.  
AL-essa, A.A., Ammar, S., AL-baloul, D., AL-Qallaf, W., Alaa,  
H., AL-Jumah, N., Bahbahani, A. and AL-Hussainan, E.  
(2007) Education Indicators in the State of Kuwait,  
Kuwait  
Bennell, P., & Segerstrom, J. (1998). Vocational education  
and training in developing countries: Has the World  
Bank got it right?. International Journal of Educational  
Development,  
18(4),  
271-287.  
Mincer, J. (1974). Education, experience, and earnings. J.  
Becker, G. S. (1962). Investment in human capital:  
A
theoretical analysis. Journal of political economy, 70(5,  
Kuwait Civil Service Commission database (2010). Kuwait.  
In addition, even though the coefficient of age in  
eq.3 is insignificant there are possible explanations for  
this finding. First, the age affects the individual choice  
in selecting the technical vocation school. Second, the  
gap in ages between the technical vocation school  
students. Third, the government pay scales are little  
consideration to the area of specialization.  
The main objectives of this paper were to present  
estimates of the returns for the two track of  
secondary level education system in Kuwait and  
demonstrate the impact of more experience and ages  
on earning. The use of the Mincer equation in its  
simpler form seems to give an approximate value for  
the total return on education.  
Alqattan, H., Stergioulas, L., & Al-Zayer, J. (2012, August).  
The Returns to Education Based on Level of Education:  
Case of Kuwait. In European Business Research  
Conference  
Proceedings.  
Herrera, L. (2010). MENA Development Report. The Road  
Not Traveled. Education Reform in the Middle East and  
Meyer, R. H., & Wise, D. A. (1983). The effects of the  
minimum wage on the employment and earnings of  
youth. Journal of Labor Economics, 1(1), 66-100. Link ,  
Moenjak, T., & Worswick, C. (2003). Vocational education in  
Thailand: a study of choice and returns. Economics of  
26  
 
J. Educ. Manage. Stud., 10(2): 22-29, 2020  
Education Review, 22(1), 99-107. Google Scholar,  
Psacharopoulos, G., & Patrinos, H. A. (2004). Human capital  
and rates of return. International Handbook on the  
Economics  
of  
Education,  
1-57.  
Neuman, S., & Ziderman, A. (2003). Can vocational education  
improve the wages of minorities and disadvantaged  
groups?: The case of Israel. Economics of education  
review,  
22(4),  
421-432.  
Sakellariou, C. (2003). Rates of return to investments in  
formal and technical/vocational education in  
Singapore. Education Economics, 11(1), 73-87. Google  
Psacharopoulos, G., & Layard, R. (1979). Human capital and  
earnings: British evidence and a critique. The Review of  
Economic Studies, 46(3), 485-503. JSTOR, Google  
27  
Alqattan, 2020  
APPENDIX  
Table of grades, salaries and social allowance categories (Kuwaiti / non-Kuwaiti)  
Repres-  
entation  
allowance  
Minimum  
stay  
in class  
Children  
Allowance  
for  
Cost of living  
Social Allowance  
Leaders  
award  
Monthly salary (basic)  
And increments  
Class / Group  
Minister  
Non-  
Kuwaiti  
Kuwaiti  
Non-  
Kuwaiti  
Kuwaiti  
Last  
bound  
Bid increment  
The number  
of increments  
First bound  
1650  
Kuwaitis  
Married Married Single  
660  
1650  
Group  
leadership positions  
231  
204  
174  
75  
50  
120  
448  
425  
400  
1500  
1000  
670  
690  
780  
680  
790  
700  
600  
Excellent  
degree  
16  
16  
Five bonuses  
Undersecretary  
of the Ministry  
Assistant Deputy  
Minister  
Fifty K.D.  
Monthly  
Up to (7)  
Children  
only  
Four  
years  
Formal Group  
Grade (A)  
82  
82  
75  
75  
69  
69  
63  
63  
57  
57  
368  
353  
328  
315  
219  
278  
250  
242  
222  
219  
268  
253  
235  
222  
203  
190  
169  
161  
580  
520  
460  
410  
360  
310  
240  
200  
165  
135  
12  
12  
10  
10  
10  
10  
8
520  
460  
410  
360  
310  
260  
200  
165  
135  
110  
66  
Grade (B)  
58.5  
First Grade  
Second Grade  
Third Grade  
Fourth Grade  
Fifth Grade  
Sixth Grade  
Seventh Grade  
Eighth Grade  
Five bonuses  
50  
120  
Two  
years  
7
147  
141  
6
5
Group Professional  
assistance  
50  
44  
282  
255  
189  
167  
295  
225  
7
Ten bonuses  
Five bonuses  
225  
First Grade  
Five  
years  
6
Second Grade  
50  
120  
38  
38  
32  
32  
135  
230  
215  
211  
154  
149  
140  
136  
165  
140  
120  
105  
5
4
3
3
140  
120  
105  
90  
Third Grade  
Fourth Grade  
Fifth Grade  
Two  
years  
Sixth Grade  
Group Assistant jobs  
First Grade  
ـ
ــــــــ
 
44  
38  
32  
253  
230  
211  
165  
149  
136  
210  
160  
120  
5
4
3
Ten bonuses  
160  
120  
90  
Five  
years  
Second Grade  
Third Grade  
50  
120  
28  
J. Educ. Manage. Stud., 10(2): 22-29, 2020  
Note: In addition to the above gives the employee the Kuwaiti increase in salary (50 dk) per month with effect from 1/7/2005 the  
disposal of an item type bonuses, allowances, bonuses and other allowances in implementation of the Council of Ministers  
Decision No. (698/2005) on 2 / 7 / 2005, provided that it has not granted any allowance or increase the cadre during the five years  
preceding the issuance of the decision (i.e. from 01.07.2000 to 07.01.2005) and by grants from increasing the transfer  
of this amount gives the difference.  
According to Law No. (27/2008) and the Council of Ministers Resolution No. (606 for the year 2008) and to mainstream the  
SAI No. (49/2008) gives the employee the Kuwaiti reward financial support terms that are net salary (1000 d. k) and maximum  
(50 d. k ) per month with effect from 08.28.2008.  
29