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

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that a greater number of educated groups became self-employed during this period.The data from the survey used in this paper are consistent with this interpretation ofthe trends. A comparison of the 1990 and 1995 cohorts of secondary schoolcompleters reveals, after the same number of months in the labour force, a greaterproportion of the earlier cohort in wage employment (see Al-Samarrai and Bennell(2003)).The changes in the demand for educated individuals and the numbers entering thelabour force after completing their education clearly impacts on the private rate ofreturn to education secured in the labour market. Table 2 summarises the findings ofstudies that have estimated private rates of return to educational qualifications in theTanzanian formal sector over the last 30 years. The returns to secondary exceed thoseto primary in Tanzania and this possibly reflects the high proportion of the labourforce with primary education and the very limited numbers with secondary education.In addition, university rates of return are significantly higher than those accruing tosecondary education. Therefore, the education system, given its selective nature,appears to give rise to high premia for individuals who gained access to secondaryand university education.[Table 2]This pattern of returns to education differs from those observed elsewhere in sub-Saharan Africa and other developing countries. Private rates of return to primary,secondary and university education in the region tend to be much higher than thosereported in table 2. Moreover, a recent review revealed higher returns to primary thanto secondary education in sub-Saharan Africa (see Psacharopoulos and Patrinos(2002)). 6 Table 2 also shows that rates of return to university qualifications are muchhigher than those obtained in the primary or secondary sectors. While the most recentreview suggests that primary returns are higher than university returns, five out of the6 In periodic reviews of rates of return studies across the world Psacharopoulos has provided regionallyaggregated rates of return to different levels of education. These have consistently shown that primaryeducation has the highest private returns followed by university and then secondary education.However, there has been substantial debate around the quality of data used in these regional aggregatesas well as the time period covered. Bennell (1996) shows that the aggregated rates of return tosecondary exceed primary for sub-Saharan Africa if poor quality studies are excluded.5
nine studies reviewed for sub-Saharan Africa showed a similar pattern to table 2,whereas the remaining four found higher rates for primary and sometimes secondary(see Table A1 Psacharopoulos and Patrinos (2002)). 7The rates of return reported in table 2 are for formal sector workers only and give noindication of the rates of return in other sectors. But as wage employees represent avery small proportion of the total labour force, this does not provide a completeportrait of the returns to education. One objective of the current paper is to explorethe rates of return to secondary and university education in both wage and selfemploymentsectors. Based on data from the sample of secondary school completersused in this paper, table 3 shows that income from self-employment is significantlylower than earnings from wage employment for this group of completers.[Table 3]7 In Psacharopoulos and Patrinos (2002) full method rates of returns are used while our table 2 reportsestimated rates of return from extended earnings functions.6
Page 1 and 2: Education, Employment and Earnings
Page 3 and 4: The structure of the paper can now
Page 5: Despite large absolute increases in
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 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
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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