Although, there are many interesting phenomena in the labor market, it is one of the least studied areas of Mongolian economy. Most of the existing literature is limited by reports on surveys conducted by National Statistical Office and International Labor Organization. While these reports provide useful insights into the overall labor market performance in Mongolia, they suffer from the usual aggregation bias and do not control for individual level effects considered in this analysis. The study shows in recent years, the labor force participation rate has decreased significantly. Moreover, if we convert returns to education into schooling years, one more year of schooling raises wage rate by about 10 percent.