The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing

Mans Soderbom, Francis Teal, Anthony Wambugu and Godius Kahyarara

No 2003-17, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: The returns to education remain a central concern for development policy. In developed countries there is evidence that the returns to education have been rising. Evidence for changes over this period for developing countries is limited. In this paper we use data from Kenya and Tanzania to estimate returns to education for manufacturing workers and examine how these returns have changed from 1980 to the late 1990s. We find strong evidence that the earnings function is convex for both countries and document significant differences in the earnings profiles across cohorts, typically with stronger convexity amongst the young. We also find evidence of increasing convexity over the 1990s in Tanzania, but remarkable stability in Kenya. We test for the importance of ability bias and find convexity robust to endogeneity. Treating education as an endogenous explanatory variable generally results in higher estimated returns to education than what is obtained by OLS. Potential reasons for this result are discussed.

Keywords: Returns to education; Africa; Kenya; Tanzania; manufacturing (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing* (2006)
Working Paper: The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing (2004)
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