Non-Linearities in Returns to Education in Libya

This paper presents evidence that returns to schooling in Libya are nonlinear. However, this evidence should not be taken as supporting the sheepskin effect. Although high-school graduation is associated with higher earnings over and above what is predicted by the linear model, other diploma years do not possess the same advantage when a spline function is used.When a step function is used, various years, some of which do not lead to a diploma, show high marginal returns.