Gender, selection, compulsory schooling and returns to education along the distribution of wages in South Africa

Compulsory schooling laws are designed to keep children in school, under the expectation that doing so increases employment opportunities and wages. However, in South Africa, the education system does not perform as well as it does in other countries, which may, in turn, mitigate the effectiveness of the compulsory schooling reform on labour market outcomes. Gender wage gap research in the country finds significant differences that need further explanation. This research investigates whether the 1997 compulsory schooling law (CSL) partially explains gender differences in the distribution of wages, and whether selection into employment moderates that relationship. The analysis is underpinned by conditional quantile regression, along with a selection-corrected version that incorporates the CSL. The data is taken from the 2018 South African General Household Survey. The results suggest that: returns are higher for women than men, the schooling reform increased returns, and are not constant across either the wage distribution or the level of schooling, suggesting that education increases wage inequality. Furthermore, we find also that correcting for selection into employment reduces the returns for women, but does not alter the ranking of returns along the wage distribution before and after the CSL implementation.