Until very recently, the conventional wisdom was that the return to education was very high in
Africa. However, some recent analysis point to low average returns to education in some
African countries including Nigeria. Given these low returns to education, a relevant question
is what causes low returns or what can cause changes in returns to education? In this paper,
I examine the hypothesis that economic and political reforms can lead to increased returns to
schooling using the case of Nigeria. Following the sudden death of military general Sanni
Abacha, Nigeria moved to democracy in 1999, ending an over 15 years stretch of military
rule. This move was followed by significant institutional and economic reforms, which provide
an opportunity to examine the short term impact of reforms on returns to education. The
average return to education is estimated using instrumental variables exploiting a quasi
experiment in Nigeria. The results provide evidence that reforms implemented post
democracy in Nigeria led to a 2.6% point increase in average returns to education.
Furthermore, I find that the low average return to schooling in Nigeria reflects more the low
returns at the primary and secondary levels.