Estimating Returns to Education in Off-Farm Activities in Rural Ethiopia
AbstractI 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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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces9903.
Date of creation: Mar 1999
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-AFR-2008-04-12 (Africa)
- NEP-ALL-2008-04-12 (All new papers)
- NEP-EDU-2008-04-12 (Education)
- NEP-LAB-2008-04-12 (Labour Economics)
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