The effect of the Universal Primary Education program on consumption and on the employment sector: Evidence from Tanzania

This paper uses the Tanzanian Universal Primary Education (UPE) program implemented between 1974 and 1978 to study the effect of education on household consumption and on labor market participation in a rural environment. Combining regional disparities of access to school with the timing of the program, I adopt a difference-in-difference approach. To estimate the returns to education for the entire population and not only for wage workers, I use a two-sample estimation approach to predict consumption for every household and find that education increases predicted consumption for household heads working in every sector. I also provide evidence that education increases the probability of working in agriculture for women. These results, at first surprising, suggest that education may influence the structural transformation and that returns to education are positive in agriculture, provided that skills taught at school are consistent with agriculture.