Estimating Returns to Education in Off-Farm Activities in Rural Ethiopia

Philip Verwimp

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: I use an extended version of Mincer's original model to estimate the returns to schooling in rural Ethiopia. In a first step, a multinomial logit model is applied to distinguish between four groups of people, (1) full-time farmers, (2) part-time farmers, part time wage workers, (3) part-time farmers, part time traders and (4) full-time non-farmers. In a second step, a correction for sample selectivity is made using the Lee-Heckman method and the returns are estimated. The results show that returns on schooling are high in group (4) and lower in groups (2) and (3). Entry in well-paid jobs is constrained for non educated people. Women are particularly well represented in the third group but strongly underrepresented in the fourth group. The estimation shows that education is a worthwile investment in rural Ethiopia and the fact that households underinvest in education can be attributed to the lack of resources at the household level.

Date: 1999-03
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Journal Article: Estimating Returns to Education in Off-Farm Activities in Rural Ethiopia (1999)
Working Paper: Estimating Returns to Education in Off-Farm Activities in Rural Ethiopia (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces9903

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