SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

Abstract: College-bound students in Japan undergo a process of intense preparation known as examination hell. An extreme manifestation of examination hell is the ronin phenomenon. Typically thirty percent of students choose the ronin option under which they spend years in addition to high school preparing for the next year fs college entrance examinations. Using the mean scores of the entrance examinations as a measure of college quality, I find that college quality significantly improves the internal rate of return (IRR) to college education among the sample of male graduates in Japan. Ronin increases earnings indirectly by improving the quality of the college attended. I also show that the IRR with respect to ronin is one of diminishing returns. On average, the number of ronin years which maximizes the IRR is found to be somewhere between one and two years.

Keywords: Human capital formation; economics of education; examination hell; ronin; cost-benefit analysis

JEL-codes: I21; J24; J31

30 pages, First version: November 30, 1999. Revised: December 1, 2005. Earlier revisions: August 22, 2000, September 12, 2003, October 27, 2005, January 6, 2006, December 1, 2005.

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