Education, Employment and Earnings of Secondary School-Leavers ...

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confirm to some extent that unobservable prices and quantities are considerably moreimportant in earnings determination for self-employed than for employees.Ignoring school effects and the selection effect already discussed, only three of theestimated coefficients for the self-employed achieve statistical significance at aconventional level: current job tenure, wage employment experience and holding auniversity qualification. The amount of experience acquired in wage employmentenhances the bi-annual earnings of the self-employed with an additional year raisingself-employed income by 24%, on average and ceteris paribus. The comparableeffect for current job tenure is 8.4%. On the face of it, the possession of a universitydegree yields sizeable benefits for the self-employed. However, it is worth noting thatonly a small number of the self-employed hold such a qualification (8 out of 214) andthese estimates may reflect more the characteristics of this small group than informinggenerally about returns to this measure of human capital in the self-employed sector.It is important to complete this sub-section by noting those factors that appear to playno role in earnings determination for the self-employed. These include gender andreligious affiliation and this could be tentatively taken to suggest little evidence ofconsumer-based discrimination in our Tanzanian sample. Earnings are reasonably flatin terms of the training measure used and the age of the individual as measured by theschool-leaver cohort control. There appears no role for parental education in earningsdetermination in the self-employed sector. There is no evidence of regional variationin self-employed earnings with no indication that thick market externalities areexploitable in the country’s capital city for the sample of self-employed. In addition,it also appears to matter little whether the individual works on ‘own-account’ oremploys others. 31The school effects and the returns to qualifications for the self-employed will bediscussed in greater detail in the next two sub-sections.31 There are reasons for believing that our measure of this may not be accurately capturing this type ofdistinction.23
5.3 The Estimated School EffectsOne motivation for the inclusion of the school fixed effects is to control, inter alia, forschooling quality in terms of its potential effect on education returns and on earningsmore generally. Their inclusion is also motivated by a sense that they might alsocapture labour market network effects. The inclusion of the school controls tends toreduce both the return to senior secondary schooling and to a university qualificationbut induces a sharper reduction in the former relative to the latter. 32 This is a relativelyintuitive result and highlights the importance of controlling for schooling quality incomputing rates of return to schooling qualifications. It is apparent that parentaleducational background is more important to the estimated university returns thansecondary schooling quality.The school effects can be interrogated more thoroughly by normalizing the tenestimated school effects as a deviation from an overall school weighted averageeffect. This transformation has intuitive appeal in that the estimated earningsdifferences are now relative to an overall average rather than an arbitrary base groupand are thus more easily interpretable. This approach follows the approach adoptedby Krueger and Summers (1988) in the literature on inter-industry wage differentials.If we define the school effect from the interval regression model for the k th school asγ k the deviation is expressed as:10γ k – j=1π j γ j [8]where π j is the proportion of the sample in the j th school. The corresponding samplingvariances are computed as per Zanchi (1998). 33 Table 6 reports the estimateddeviations for the ten schools for both wage employees and the self-employed.[Table 6]32 In Table 4 the estimated coefficient for the senior secondary qualification reduced by one-quarterwith the inclusion of school fixed effects, while the comparable estimate for the university qualificationreduces by just under one-tenth.33 See also Haisken-DeNew and Schmidt (1997) for a more detailed discussion.24
Page 1 and 2: Education, Employment and Earnings
Page 3 and 4: The structure of the paper can now
Page 5 and 6: Despite large absolute increases in
Page 7 and 8: nine studies reviewed for sub-Sahar
Page 9 and 10: It should be noted, however, that e
Page 11 and 12: history, current activity and incom
Page 13 and 14: In order to understand how the mode
Page 16 and 17: freedom for this test. In regard to
Page 18 and 19: where φ(·) denotes the probabilit
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Page 22 and 23: 4.8% per annum in the first three s
Page 26 and 27: The ceteris paribus earnings for th
Page 28 and 29: [Table 7]The rate of return for a u
Page 30 and 31: 6. ConclusionsA key finding of our
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Page 34 and 35: Knight, J.B. and Sabot, R.H. (1981)
Page 36 and 37: Table 1: Highest level of education
Page 38 and 39: Table 4 (Cont’d)SelectionCorrecti
Page 40 and 41: Table 5 (cont’d)Selection Correct
Page 42 and 43: Table A1: Variable DescriptionVaria

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