Education, Employment and Earnings of Secondary School-Leavers ...
Education, Employment and Earnings of Secondary School-Leavers ... Education, Employment and Earnings of Secondary School-Leavers ...
6. ConclusionsA key finding of our analysis is that the point estimates for the private returns to auniversity education are higher compared to senior secondary and this finding iscompatible with the notion of a convex relationship between earnings and educationallevel as recently posited for Tanzania by Söderbom et al. (2003). On the basis of acrude comparison with previous studies, there is no indication that the estimated ratesof return to senior secondary and university qualifications have actually increasedover the last decade. Indeed, there is evidence of some degree of stability in thesereturns over time. However, we do accept that such a comparison can only provide atentative rather than definitive insight into the temporal movement in the returns to auniversity education.Further education and training undertaken by secondary school leavers, once formaleducation is completed, appears to increase wage employment earnings significantly.This is a comforting result given the heavy investments secondary school-leaversmake in further education and training. The respondents in our survey, who hadcompleted junior secondary education in 1990 (1995), had spent approximately 3 (2)years between 1990 (1995) and 2001 in further education and training (see Al-Samarrai and Bennell (2003)). Unfortunately it was not possible to dis-aggregate themonths of training between their different types. A deeper understanding of whichtypes of training have the biggest impact on earnings would be an interesting avenuefor future research but is not pursued here.Information contained in the tracer surveys allowed us to include controls for father’seducational background and a set of school controls designed to proxy for schoolquality and potential labour market network effects. The inclusion of school fixedeffects reduced the estimated rates of return to education. The analysis shows that theschool an individual attends is important and this in part may be due to labournetwork effects with leavers for particular schools having preferential access to betterpaying jobs through school or other contacts. A further key finding in our analysis29
elates to the role of father’s education in determining the estimated returns to aparticular qualification. If we exclude these controls from the employee earningsequation and re-compute the rates of return for the two qualifications, the rate ofreturn to senior secondary is unaffected while the estimated return to a universityqualification rises by 1.5 percentage points. 36 This serves to emphasize the potentialconfounding role of parental background in such estimates. We would argue that afailure to control for such background variables potentially leads to an over-statementin the estimated returns to at least university qualifications.In general, we found little evidence of well determined human capital effects in theearnings determination process in the self-employment sector. It is acknowledgedthat university education appeared to exert a statistically significant impact on selfemploymentearnings but the small cell size for this group merits interpretationalcaution. The estimated self-employment earnings equation was found to be poorlydetermined. These facts are hardly surprising given the traditional type of selfemploymentactivities in which secondary school leavers were engaged. Typically,secondary school leavers were working as small-scale vendors (i.e., buying andselling goods) with relatively few additional staff (see Al-Samarrai and Bennell(2003)). It is unlikely that post-primary education will be of much benefit in theseactivities. Furthermore, secondary school leavers in Tanzania approached selfemploymentas a queuing strategy for waged employment opportunities. Given theincreasing numbers of secondary school-leavers entering self-employment thesefindings are worrying from a policy perspective. Secondary school-leaversinterviewed for the survey indicated that they were at least partially aware of the lackof relevance of their secondary education for self-employment as only a minorityagreed that the secondary school curriculum was relevant (see Al-Samarrai andBennell (2003)).Finally, the estimates we obtained for the private rates of return to both secondary anduniversity qualifications for wage employees were comparable in magnitude to thoseobtained using the Tanzanian Labour Force Survey. Our empirical evidence suggests36 This is based on excluding the parental controls from specification (4) and re-computing the rate ofreturn as per expression [10].30
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6. ConclusionsA key finding <strong>of</strong> our analysis is that the point estimates for the private returns to auniversity education are higher compared to senior secondary <strong>and</strong> this finding iscompatible with the notion <strong>of</strong> a convex relationship between earnings <strong>and</strong> educationallevel as recently posited for Tanzania by Söderbom et al. (2003). On the basis <strong>of</strong> acrude comparison with previous studies, there is no indication that the estimated rates<strong>of</strong> return to senior secondary <strong>and</strong> university qualifications have actually increasedover the last decade. Indeed, there is evidence <strong>of</strong> some degree <strong>of</strong> stability in thesereturns over time. However, we do accept that such a comparison can only provide atentative rather than definitive insight into the temporal movement in the returns to auniversity education.Further education <strong>and</strong> training undertaken by secondary school leavers, once formaleducation is completed, appears to increase wage employment earnings significantly.This is a comforting result given the heavy investments secondary school-leaversmake in further education <strong>and</strong> training. The respondents in our survey, who hadcompleted junior secondary education in 1990 (1995), had spent approximately 3 (2)years between 1990 (1995) <strong>and</strong> 2001 in further education <strong>and</strong> training (see Al-Samarrai <strong>and</strong> Bennell (2003)). Unfortunately it was not possible to dis-aggregate themonths <strong>of</strong> training between their different types. A deeper underst<strong>and</strong>ing <strong>of</strong> whichtypes <strong>of</strong> training have the biggest impact on earnings would be an interesting avenuefor future research but is not pursued here.Information contained in the tracer surveys allowed us to include controls for father’seducational background <strong>and</strong> a set <strong>of</strong> school controls designed to proxy for schoolquality <strong>and</strong> potential labour market network effects. The inclusion <strong>of</strong> school fixedeffects reduced the estimated rates <strong>of</strong> return to education. The analysis shows that theschool an individual attends is important <strong>and</strong> this in part may be due to labournetwork effects with leavers for particular schools having preferential access to betterpaying jobs through school or other contacts. A further key finding in our analysis29
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