Returns to Education and Male-Female Wage Differential in Ethiopia: An Analysis of Urban Household Survey

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Date

1998-05

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A.A.U

Abstract

The main objectives of this study are to estimate and analyse the private returns to education and to look into the existence of gender discrimination in the Ethiopian Lab our Market. The methodologies used to that end are the OLS, the Heckman's two-step and the MLE two-step Procedures. The main findings of the study are the following . Educational investment is paying to an individual. One year of additional schooling, primary, secondary and higher education is found to have a return of 10, 5, 10.6 and 31 percent respectively. These estimates show that the private return to primary education is the lowest. No significant difference is observed between the private returns to males and females indicating that the existing disparity in enrolments is not explained by returns to education. Family background in the form of maternal education has been found to have significant impact on chldren's earnings implying that females' education has trans generational effect. The observed wage differential in the Ethiopian Labour Market is mostly explained by differences in productivity enhancing attributes rather than by discrimination. There are important policy implications to be drawn. Mere expansion of primary education may not result in improving the living standards and efforts should be made to revitalise its quality and relevance to the world of work. The government's intention to introduce costs haring arrangements at higher education is an optimal policy response to existing economic incentives. Improving female enrolments not only will reduce the wage differential between males and females but will also have a long-run economic benefit. So, resources should be committed to that end.

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Keywords

Education and Male-Female, Differential in Ethiopia

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