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Understanding Low Average Returns to Education in Africa: The Role of Heterogeneity across Education Levels and the Importance of Political and Economic Reforms

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Author Info
Uwaifo Oyelere, Ruth () (Georgia Tech)

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Abstract

Until very recently, the conventional wisdom was that the return to education was very high in Africa. However, some recent analysis point to low average returns to education in some African countries including Nigeria. Given these low returns to education, a relevant question is what causes low returns or what can cause changes in returns to education? In this paper, I examine the hypothesis that economic and political reforms can lead to increased returns to schooling using the case of Nigeria. Following the sudden death of military general Sanni Abacha, Nigeria moved to democracy in 1999, ending an over 15 years stretch of military rule. This move was followed by significant institutional and economic reforms, which provide an opportunity to examine the short term impact of reforms on returns to education. The average return to education is estimated using instrumental variables exploiting a quasi experiment in Nigeria. The results provide evidence that reforms implemented post democracy in Nigeria led to a 2.6% point increase in average returns to education. Furthermore, I find that the low average return to schooling in Nigeria reflects more the low returns at the primary and secondary levels.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3766.

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Length: 42 pages
Date of creation: Oct 2008
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Handle: RePEc:iza:izadps:dp3766

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Related research
Keywords: returns to education; wage reform; military; democratic reform;

Find related papers by JEL classification:
J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
P5 - Economic Systems - - Comparative Economic Systems

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References listed on IDEAS
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  2. Daoud, Yousef, 2005. "Gender gap in returns to schooling in Palestine," Economics of Education Review, Elsevier, vol. 24(6), pages 633-649, December. [Downloadable!] (restricted)
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  24. Gorodnichenko, Yuriy & Sabirianova Peter, Klara, 2005. "Returns to schooling in Russia and Ukraine: A semiparametric approach to cross-country comparative analysis," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 324-350, June. [Downloadable!] (restricted)
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  25. Alberto Abadie & Guido W. Imbens, 2002. "Simple and Bias-Corrected Matching Estimators for Average Treatment Effects," NBER Technical Working Papers 0283, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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