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Determinants of Urban Worker Earnings in Ghana and Tanzania: The Role of Education

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  • Priscilla Twumasi Baffour
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    Abstract

    The paper examines the role of education in earnings determination by using all three rounds of the Urban Worker Surveys of Tanzania and Ghana for 2004-2006. We investigate and compare heterogeneity in earnings determinants among self-employed (informal), private and public sector workers. We examine the role education, individual and household characteristics play in facilitating entry into employment sectors in addition to analysing the pattern of returns to education along the earnings distribution. After addressing endogeneity and selectivity biases associated with estimating earnings equations, we find that education plays an important role in promoting access to formal sector jobs, particularly employment in the public sector, but has no direct impact on earnings within the sector in both countries. Results from quantile regressions indicate primary and secondary levels of education are inequality-reducing among workers in Tanzania but this is not the case in Ghana. Tertiary education on the other hand is found to widen earnings inequality in both Tanzania and Ghana.

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    File URL: http://www.nottingham.ac.uk/credit/documents/papers/13-01.pdf
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    Bibliographic Info

    Paper provided by University of Nottingham, CREDIT in its series Discussion Papers with number 13/01.

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    Handle: RePEc:not:notcre:13/01

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    Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
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    Web page: http://www.nottingham.ac.uk/economics/
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    Keywords: Education; Earnings; employment sector; Tanzania; Ghana;

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    1. Mwabu, Germano & Schultz, T Paul, 1996. "Education Returns across Quantiles of the Wage Function: Alternative Explanations for Returns to Education by Race in South Africa," American Economic Review, American Economic Association, American Economic Association, vol. 86(2), pages 335-39, May.
    2. Callan, T. & Harmon, C.P., 1997. "The Economic Return to Schooling in Ireland," Papers, College Dublin, Department of Political Economy- 97/23, College Dublin, Department of Political Economy-.
    3. Francis Teal & Simon Quinn, 2008. "Private sector development and income dynamics: A panel study of the Tanzanian labour market," Economics Series Working Papers, University of Oxford, Department of Economics WPS/2008-09, University of Oxford, Department of Economics.
    4. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, Econometric Society, vol. 52(2), pages 345-62, March.
    5. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, Econometric Society, vol. 69(5), pages 1127-60, September.
    6. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 2000. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," NBER Working Papers 7457, National Bureau of Economic Research, Inc.
    7. Neil Rankin & Justin Sandefur & Francis Teal, 2010. "Learning & Earning in Africa: Where are the Returns to Education High?," CSAE Working Paper Series 2010-02, Centre for the Study of African Economies, University of Oxford.
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