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Heterogeneity In Returns To Investment In Education In Egypt

Author

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  • SANTIAGO HERRERA

    (World Bank, Ghana, Liberia and Sierre Leone Office, Independence Avenue, 10th Street, North Ridge, Aeera, Ghana)

  • KARIM BADR

    (World Bank, Cairo Office, 1191 Cournich El Nile Street, Cairo, Egypt)

Abstract

The paper estimates the rates of return to investment in education in Egypt, allowing for multiple sources of heterogeneity across individuals. The paper finds that, in the period 1998–2006, returns to education increased for workers with higher education, but fell for workers with intermediate education levels; the relative wage of illiterate workers also fell in the period. This change can be explained by supply and demand factors. On the supply side, the number of workers with intermediate education, as well as illiterate ones, outpaced the growth of other categories joining the labor force during the decade. From the labor demand side, the Egyptian economy experienced a structural transformation by which sectors demanding higher-skilled labor expanded. In Egypt, individuals are sorted into different educational tracks, creating the first source of heterogeneity. Second, the paper finds that large-firm workers earn higher returns than small-firm workers. Third, females have larger returns to education. Formal workers earn higher rates of return to education than those in the informal sector, which did not happen a decade earlier. And finally, those individuals with access to technology (as proxied by personal computer ownership) have higher returns.

Suggested Citation

  • Santiago Herrera & Karim Badr, 2013. "Heterogeneity In Returns To Investment In Education In Egypt," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 1-43.
  • Handle: RePEc:wsi:medjxx:v:05:y:2013:i:03:n:s179381201350020x
    DOI: 10.1142/S179381201350020X
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    References listed on IDEAS

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    1. Therry Lallemand & François Rycx, 2006. "Establishment Size and the Dipsersion of Wages: Evidence from european Countries," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 52(4), pages 309-336.
    2. Mona Said, 2007. "The Fall and Rise of Earnings and Inequality in Egypt: New Evidence From the ELMPS, 2006," Working Papers 708, Economic Research Forum, revised 01 Jan 2007.
    3. Barrera-Osorio, Felipe & Linden, Leigh L., 2009. "The use and misuse of computers in education : evidence from a randomized experiment in Colombia," Policy Research Working Paper Series 4836, The World Bank.
    4. World Bank, 2011. "Can Computers Help Students Learn?," World Bank Publications - Reports 10455, The World Bank Group.
    5. Jackline Wahba, 1996. "Earnings and Regional Inequality in Egypt," Working Papers 9613, Economic Research Forum, revised 05 Feb 1996.
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    Cited by:

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