In this paper, we estimate wage returns to investment in education for persons with
disabilities in Nepal, using information on the timing of being impaired during school-age
years as identifying instrumental variables for years of schooling. We employ unique data
collected from persons with hearing, physical, and visual impairments as well as nationally
representative survey data from the Nepal Living Standard Survey 2003/2004 (NLSS II).
After controlling for endogeneity bias arising from schooling decisions as well as sample
selection bias due to endogenous labor participation, the estimated rate of returns to education
is very high among persons with disabilities, ranging from 19.4 to 33.2%. The coexistence
of these high returns to education and limited years of schooling suggest that supply side
constraints in education to accommodate persons with disabilities and/or there are credit
market imperfections. Policies to eliminate these barriers will mitigate poverty among
persons with disabilities, the largest minority group in the world.
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