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Estimating Returns to Education in Off-Farm Activities in Rural Ethiopia

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  • Philip Verwimp

Abstract

I use an extended version of Mincer's original model to estimate the returns to schooling in rural Ethiopia. In a first step, a multinomial logit model is applied to distinguish between four groups of people, (1) full-time farmers, (2) part-time farmers, part time wage workers, (3) part-time farmers, part time traders and (4) full-time non-farmers. In a second step, a correction for sample selectivity is made using the Lee-Heckman method and the returns are estimated. The results show that returns on schooling are high in group (4) and lower in groups (2) and (3). Entry in well-paid jobs is constrained for non educated people. Women are particularly well represented in the third group but strongly underrepresented in the fourth group. The estimation shows that education is a worthwile investment in rural Ethiopia and the fact that households underinvest in education can be attributed to the lack of resources at the household level.
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Suggested Citation

  • Philip Verwimp, 1999. "Estimating Returns to Education in Off-Farm Activities in Rural Ethiopia," Working Papers of Department of Economics, Leuven 501110, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:501110
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    File URL: https://lirias.kuleuven.be/retrieve/324684
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    Cited by:

    1. Heather Congdon Fors & Kenneth Houngbedji & Annika Lindskog, 2015. "Land Certification and Schooling in Rural Ethiopia," PSE Working Papers halshs-01202695, HAL.
    2. Congdon Fors, Heather & Houngbedji, Kenneth & Lindskog, Annika, 2019. "Land certification and schooling in rural Ethiopia," World Development, Elsevier, vol. 115(C), pages 190-208.
    3. World Bank, 2005. "Education in Ethiopia : Strengthening the Foundation for Sustainable Progress," World Bank Publications - Books, The World Bank Group, number 7434, December.

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