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 oberved 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.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number CSAE WPS/2010-02.
Date of creation: 01 Jan 2010
Date of revision:
Other versions of this item:
- 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.
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.
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- Schmertmann, Carl P., 1994. "Selectivity bias correction methods in polychotomous sample selection models," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 101-132.
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- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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