The Effect of Foreign Education on Labor Income in Panama: An Econometric Analysis

Abstract

This study examines the relationship between international education and labor income among professionals in Panama, within a context of economic growth that coexists with heterogeneous access to educational and labor opportunities. The objective is to estimate the extent to which studying abroad is associated with income differences, integrating both human capital and signaling approaches. The analysis is based on the Mincer (1974) earnings equation, extended to include sociodemographic, economic, and social mobility variables. An econometric approach is applied, combining a two-stage Heckman model with robust estimations to correct for potential selection bias and improve the consistency of the results. Findings suggest that international education is positively associated with income within the analyzed sample, even after controlling for educational level, English proficiency, and other individual characteristics. Additionally, English language skills and postgraduate education are significantly associated with higher income levels. These results are consistent with the literature on returns to education and global competencies, although they are not generalizable due to the non-probabilistic nature of the sample. In terms of implications, the study highlights the importance of strengthening policies for educational internationalization, developing strategic competencies, and equitable access to training opportunities.