The causal effect of education on poverty: evidence from Turkey

Abstract

This paper uses cross sectional survey data to explore the two-way causality between the household head's education level and poverty in Turkey. In contrast with the existing studies, this is the first study to examine the issue of a possible endogeneity problem. For that purpose and to overcome the simultaneity bias, we adopt the most commonly used Instrumental Variable (IV) estimation technique, two-stage least squares (2SLS) regression. Our IV estimates indicate that the policy reform, which was implemented in 1961, only increases the household head's years of education for rural residents. Furthermore, the higher the level of education of the household head, the higher the household per capita income. Policy recommendations for policymakers are addressed in the conclusion.