In the last two decades, the social and economic benefits of formal education in Sub-Saharan
Africa have been debated. Anecdotal evidence points to low returns to education in Africa.
Unfortunately, there is limited econometric evidence to support these claims at the micro
level. In this study, I focus on Nigeria a country that holds 1/5 of Africa’s population. I use
instruments based on the exogenous timing of the implementation and withdrawal of free
primary education across regions in this country to consistently estimate the returns to
education in the late 1990s. The results show the average returns to education are
particularly low in the 90s, in contrast to conventional wisdom for developing countries (2.8%
for every extra year of schooling between 1997 and 1999). Surprisingly, I find no significant
differences between OLS and IV estimates of returns to education when necessary controls
are included in the wage equation. The low returns to education results shed new light on
both the changes in demand for education in Nigeria and the increased emigration rates from
African countries that characterized the 90s.