The effect of Polity on the returns to education

Education is considered an important instrument for economic development, but does education have the same effect under different circumstances? This study performs a multiple regression analysis to answer the question: Does polity affect the payoff of education? The results show a significant negative effect of the level of democracy on the payoff of education. In other words, in more autocratic countries, the payoff of education is shown to be higher. The effect of a change from one end of the spectrum, the highest autocracy score, to the highest level of democracy, is somewhere between 2 to 4 percentage point of GDP.