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Africa’s Education Enigma? The Nigerian Story

  • Uwaifo Oyelere, Ruth

    ()

    (Emory University)

In the last two decades, the social and economic benefits of formal education in Sub-Saharan Africa have been debated. Anecdotal evidence points to low returns to education in Africa. Unfortunately, there is limited econometric evidence to support these claims at the micro level. In this study, I focus on Nigeria a country that holds 1/5 of Africa’s population. I use instruments based on the exogenous timing of the implementation and withdrawal of free primary education across regions in this country to consistently estimate the returns to education in the late 1990s. The results show the average returns to education are particularly low in the 90s, in contrast to conventional wisdom for developing countries (2.8% for every extra year of schooling between 1997 and 1999). Surprisingly, I find no significant differences between OLS and IV estimates of returns to education when necessary controls are included in the wage equation. The low returns to education results shed new light on both the changes in demand for education in Nigeria and the increased emigration rates from African countries that characterized the 90s.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3097.

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Length: 42 pages
Date of creation: Oct 2007
Date of revision:
Publication status: published in: Journal of Development Economics, 2010, 91 (1), 128-139
Handle: RePEc:iza:izadps:dp3097
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  1. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
  2. 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, vol. 86(2), pages 335-39, May.
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  7. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
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  9. Jones, Patricia, 2001. "Are educated workers really more productive?," Journal of Development Economics, Elsevier, vol. 64(1), pages 57-79, February.
  10. William Easterly, 2002. "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550423, June.
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  12. Harmon, C & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
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  14. Siphambe, Happy Kufigwa, 2000. "Rates of return to education in Botswana," Economics of Education Review, Elsevier, vol. 19(3), pages 291-300, June.
  15. Nielsen, Helena Skyt & Westergard-Nielsen, Niels, 2001. "Returns to Schooling in Less Developed Countries: New Evidence from Zambia," Economic Development and Cultural Change, University of Chicago Press, vol. 49(2), pages 365-94, January.
  16. Knight, J B & Sabot, R H & Hovey, D C, 1992. "Is the Rate of Return on Primary Schooling Really 26 Per Cent?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 1(2), pages 192-205, August.
  17. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  18. Maluccio, John A., 1998. "Endogeneity of schooling in the wage function," FCND discussion papers 54, International Food Policy Research Institute (IFPRI).
  19. Adebayo Aromolaran, 2004. "Wage Returns to Schooling in Nigeria," African Development Review, African Development Bank, vol. 16(3), pages 433-455.
  20. Glewwe, Paul, 1996. "The relevance of standard estimates of rates of return to schooling for education policy: A critical assessment," Journal of Development Economics, Elsevier, vol. 51(2), pages 267-290, December.
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