Learning & Earning in Africa: Where are the Returns to Education High?
This 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 observed 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.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: Manor Road, Oxford, OX1 3UQ|
Phone: +44-(0)1865 271084
Fax: +44-(0)1865 281447
Web page: http://www.csae.ox.ac.uk/
More information through EDIRC
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.:
- 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.
When requesting a correction, please mention this item's handle: RePEc:csa:wpaper:2010-02. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Payne)
If references are entirely missing, you can add them using this form.