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The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing

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  • Måns Söderbom
  • Francis Teal
  • Anthony Wambugu
  • Godius Kahyarara

Abstract

We use micro data on manufacturing employees in Kenya and Tanzania to estimate returns to education and investigate the shape of the earnings function in the period 1993-2001. In Kenya, there have been long-run falls in the returns to education while for Tanzania there is evidence of rising returns in the 1990s. The earnings functions are convex for both countries and this result is robust to endogeneity. Convexity may be part of the explanation as to how rapid expansion of education in Africa has generated so little growth if expansion has been concentrated at lower levels of education. Copyright 2006 Blackwell Publishing Ltd.

Suggested Citation

  • Måns Söderbom & Francis Teal & Anthony Wambugu & Godius Kahyarara, 2006. "The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(3), pages 261-288, June.
  • Handle: RePEc:bla:obuest:v:68:y:2006:i:3:p:261-288
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    References listed on IDEAS

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    1. Bennell, Paul, 1996. "Rates of return to education: Does the conventional pattern prevail in sub-Saharan Africa?," World Development, Elsevier, pages 183-199.
    2. Richard Blundell & James L. Powell, 2001. "Endogeneity in nonparametric and semiparametric regression models," CeMMAP working papers CWP09/01, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    3. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, pages 931-954.
    4. Geeta Gandhi Kingdon & Jeemol Unni, 2001. "Education and Women's Labour Market Outcomes in India," Education Economics, Taylor & Francis Journals, pages 173-195.
    5. Bigsten, Arne, et al, 2000. "Rates of Return on Physical and Human Capital in Africa's Manufacturing Sector," Economic Development and Cultural Change, University of Chicago Press, vol. 48(4), pages 801-827, July.
    6. Garen, John, 1984. "The Returns to Schooling: A Selectivity Bias Approach with a Continuous Choice Variable," Econometrica, Econometric Society, pages 1199-1218.
    7. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, pages 1325-1343.
    8. Kingdon, Geeta Gandhi & Teal, Francis, 2007. "Does performance related pay for teachers improve student performance? Some evidence from India," Economics of Education Review, Elsevier, vol. 26(4), pages 473-486, August.
    9. Soderbom, Mans & Teal, Francis, 2004. "Size and efficiency in African manufacturing firms: evidence from firm-level panel data," Journal of Development Economics, Elsevier, pages 369-394.
    10. Amemiya, Takeshi, 1974. "The nonlinear two-stage least-squares estimator," Journal of Econometrics, Elsevier, pages 105-110.
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    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Economic Systems

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