Learning & Earning in Africa: Where are the Returns to Education High?
AbstractThis paper investigates the role of learning - through formal schooling and time spent in the labor market - in explaining labor market outcomes of urban workers in Ghana and Tanzania. We investigate these issues using a new data set measuring incomes of both formal sector wage workers and the self-employed in the informal sector. In both countries we find significant, convex returns to education and large earnings differentials between sectors when we pool the data and do not control for selection. In Ghana there is a particularly steep age-earnings profile. We investigate how far a Harris-Todaro model of market segmentation or a Roy model of selection can explain the patterns observed in the data. We find highly significant differences across occupations and important effects from selection in both countries. The data is consistent with a pattern by which higher ability individuals queue for the high wage formal sector jobs such that the age earnings profile is convex for the self-employed in Ghana once we control for selection. The returns to education are far higher in the large firm sector than in others and in this sector they are linear not convex. In both countries there is clear evidence of convexity in the returns to education for the self-employed and here the average returns are low.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2010-02.
Date of creation: 2010
Date of revision:
Other versions of this item:
- Francis Teal & Justin Sandefur & Neil Rankin, 2010. "Learning; Earning in Africa: Where are the Returns to Education High?," Economics Series Working Papers CSAE WPS/2010-02, University of Oxford, Department of Economics.
- NEP-AFR-2010-08-06 (Africa)
- NEP-ALL-2010-08-06 (All new papers)
- NEP-DEV-2010-08-06 (Development)
- NEP-LAB-2010-08-06 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Geeta Kingdon & Justin Sandefur & Francis Teal, 2006.
"Labour Market Flexibility, Wages and Incomes in Sub‐Saharan Africa in the 1990s,"
African Development Review,
African Development Bank, vol. 18(3), pages 392-427.
- Francis Teal & Geeta Kingdon & Justin Sandefur, 2005. "Labor Market Flexibility, Wages and Incomes in sub-Saharan Africa in the 1990s," Economics Series Working Papers GPRG-WPS-030, University of Oxford, Department of Economics.
- Jolliffe, Dean, 1998. "Skills, Schooling, and Household Income in Ghana," World Bank Economic Review, World Bank Group, vol. 12(1), pages 81-104, January.
- Justin Sandefur & Pieter Serneels, 2006. "African poverty through the lens of labor economics: Earnings & mobility in three countries," Economics Series Working Papers GPRG-WPS-060, University of Oxford, Department of Economics.
- Soderbom, Mans & Teal, Francis & Wambugu, Anthony, 2005. "Unobserved heterogeneity and the relation between earnings and firm size: evidence from two developing countries," Economics Letters, Elsevier, vol. 87(2), pages 153-159, May.
- Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-62, March.
- Schmertmann, Carl P., 1994. "Selectivity bias correction methods in polychotomous sample selection models," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 101-132.
- Andrew Kerr, 2012.
"A Model of Comparative Advantage with Matching in the Urban Tanzanian Labour Market,"
CSAE Working Paper Series
2012-21, Centre for the Study of African Economies, University of Oxford.
- Andrew Kerr, 2012. "A Model of Comparative Advantage with Matching in the Urban Tanzanian Labour Market," Economics Series Working Papers WPS/2012-21, University of Oxford, Department of Economics.
- Francis Teal, 2010. "Higher Education and Economic Development in Africa: a Review of Channels and Interactions," Economics Series Working Papers CSAE WPS/2010-25, University of Oxford, Department of Economics.
- Abdoulaye Diagne & Bity Diene, 2011. "Estimating Returns to Higher Education: A Survey of Models, Methods and Empirical Evidence," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 20(suppl_3), pages -iii132, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Payne).
If references are entirely missing, you can add them using this form.