Evaluating the rate of private return on graduate studies in Iran by using multilevel models

The purpose of this study was to examine graduate studies private rate of return in Iran by using multilevel models. Using latest statistics, applying a multilevel analysis and Mincer earnings function, the effect of university graduate education on employed earnings was investigated. In multilevel analysis method used, major groups activities are considered as second level units. Meanwhile, by measuring the average years of individuals’ unemployment after completing education and adjusting the years after graduation, the estimates of the years of work experience considered to be closer to reality. The most important results of the study showed that the data have a hierarchical structure. In addition, graduate studies have a positive impact on job earnings and the rate of the impact for each additional year of education is 12.3% - a rate that exceeds the opportunity cost of education in developing countries (10%). The study also indicated that the effect of work experience on earnings is 2.6%. This goes beyond the other incentives to enter graduate studies. This result showed the individual's economic justification. Employees earnings with graduate degrees in urban areas was 21.4% more than the same group in rural areas, justifying the migration of labor force with graduate degrees to urban areas. Lastly, the return of each additional year of graduate studies is more than the return of each additional year of higher education