Education and Wage in East and West Africa
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Date
2013-06
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Abstract
This paper examines the extent to which levels of education of a wage employee
account for wage difference in a selected sample of workers in Kenya, Tanzania, Uganda,
Madagascar, Ghana, Niger, Guinea Conakry, Rwanda, Benin and Togo. The paper uses
country specific factors to control for omitted variable bias. Using OLS and Control
function estimates, the paper confirms significant wage difference accounted for by
education attainment. Estimates of the models suggest a positive correlation between
education and wages.The square term of schooling is highly significant indicating nonlinearity
of the returns to education, such that at higher levels of education the marginal
returns to schooling is greater than the marginal returns to schooling at lower levels of
education. The paper shows strong evidence that at primary level of education there is wage
difference of 4.82 per cent due to one year of education, while middle school graduates
have 6.3 per cent wage premium and so on. Country specific attributes have a positive
influence on the extent of wage differences by country. Thus, it is likely that wage
differences of education are a result of self-selectivity.
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Keywords
Education, Wage, OLS, Africa
Citation
Kahyarara, G., (2013). Education and Wage in East and West Africa. Revue d’Economie Théorique et Appliquée ISSN, 1840, p.7277.