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

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The ceteris paribus earnings for those in eight of the ten schools are not statisticallydifferent from the average for either the employee or the self-employed groups.However, there are two schools for which the earnings of their alumni (bothemployees and the self-employed) are different from the overall average. One schoolis well above and the other well below the average. In terms of the employee groupthe graduates of one school earn ceteris paribus about 59% more than the average,while graduates from the less favoured school earn ceteris paribus about 38% lessthan the average. The contrast in earnings performance between the graduates fromthe two schools appears starker in terms of the point estimates for the self-employedbut there is no statistical difference in these effects across the two employment sectors– either individually or jointly. In addition, the estimated Spearman rank ordercorrelation coefficient for school rankings across the two sectors on the basis of theearnings of their alumni is 0.71 and this is statistically significant from zero at the 5%level.It is evident that the school an individual attends matters in a number of cases but whyit matters may be too complex to unravel satisfactorily given the data to hand. Themore favourable school identified in table 6 is a private co-educational non-boardingschool based in an urban area of Tanzania. The less favourable school is a publicschool but identical to the other school in respect of the characteristics noted. Inaddition, the national ranking of the public school in the 1990s actually appearssuperior in comparison to that of the private school. However, those that attended thelatter tended to be disproportionately drawn from backgrounds where the father hadeither secondary or higher education. Thus, it could legitimately be argued that thisparticular school effect is partly capturing a socio-economic background factor that isnot entirely attributable to an independent school quality effect. It might capturelabour market network effects in the sense that graduates from this particular schoolare better able to exploit a network of former graduates who have perhaps attainedinfluential positions in the Tanzanian labour market. It is worth noting that schooleight in table 6 is also a private school, albeit in a rural area, but its alumni weredrawn from backgrounds where the father was less likely to have education beyond aprimary level.25
5.4 Estimated Private Rates of Return to Educational QualificationsWe now turn to an examination of the estimated private rates of return for the twoeducational qualifications used here – senior secondary and university. These arecomputed using the differences in the estimated coefficients between adjacentqualifications divided by the difference in years. If we define the interval regressionearnings model parameter for a university qualification as γ U and for senior secondaryas γ S , the rate of return (RoR) to a university qualification is computed as:RoR – University Qualification =UγUYears- γ-SSYears[9]where U Years is total years in education to acquire a university qualification and S Yearsis the corresponding number of years taken to acquire a senior secondaryqualification. The rate of return to senior secondary schooling can then be computedas:RoR – Senior Secondary Qualification =SYearsγS- JYears[10]where J Years is total years in education to acquire a junior certification qualification.The sampling variances for the estimated rates of return are easily computed using theconventional formula.The estimated rates return reported in table 7 are the exponentiated versions of [9] and[10] expressed in percentages and the corresponding sampling variances areconstructed using the delta method. In respect of employees the point estimate for thesenior secondary qualification is just under nine per cent but is situated within a largeconfidence interval and is only significant at the 10 per cent level. The comparablepoint estimate for the self-employed is close to five per cent but is even moreimprecisely estimated.At a conventional level of statistical significance, theproposition that the sample data were generated from an underlying population with azero return for the senior secondary qualification cannot be rejected for the selfemployed.26
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
Page 20 and 21: 5.1 Earnings Equation - The Employe
Page 22 and 23: 4.8% per annum in the first three s
Page 24 and 25: confirm to some extent that unobser
Page 28 and 29: [Table 7]The rate of return for a u
Page 30 and 31: 6. ConclusionsA key finding of our
Page 32 and 33: that the rates of return to educati
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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