Have Returns to Education Changed in Nigeria? Uncovering the Role of Democratic Reforms

There is documented evidence that returns to education were low during the military rule of the 1990s in Nigeria. In this paper, I investigate the claim that after democracy in 1999, there have been increases in the returns to education. In addition, I examine the possible role of democratic reform in explaining this time difference in return. Following the sudden death of military general Sanni Abacha, Nigeria moved to democracy in 1999, ending a 15-year stretch of military rule. This move was followed by significant institutional and economic reforms, which could lead to changes in returns to education. The average return to education before and after 1999 is estimated using instrumental variables, and consistent estimates of the change in return are derived. The results provide evidence that returns to education have increased in Nigeria after 1999. More importantly, I show that reforms implemented after democracy in Nigeria can explain a significant part of this increase in returns to education although we cannot completely rule out other secondary factors. Further, evidence is provided that the wage reform implemented after democracy plays a significant role in explaining the higher increases in returns for government workers and those with tertiary education, in comparison to others. Copyright 2011 , Oxford University Press.