Returns to education in South Africa: evidence from the Machibisa township

Type Journal Article - African Development Review
Title Returns to education in South Africa: evidence from the Machibisa township
Author(s)
Volume 17
Issue 3
Publication (Day/Month/Year) 2005
Page numbers 513-535
URL http://open.uct.ac.za/bitstream/handle/11427/7390/DPRU_WP03-076.pdf?sequence=1
Abstract
For a long time, there was a consensus that returns to primary education are high across all developing countries (Psacharopoulos and Patrinos, 2002). However, recent evidence is starting to point to the contrary in much of sub-Saharan Africa. We contribute to this literature by using the institutional characteristics of South Africa and start by developing a theoretical model to derive conditions under which black workers in the private sector earn no returns to education. Using a sample of black females in the late apartheid Kwa Zulu, so as to control for labor market specific effects, we find that more that a fifth of labor market participants are self-employed. We find no returns to primary education and positive returns for the first two years of secondary education. Further education allows females to find employment in the government sector where they earn a wage premium. Only secondary education is a predictor of earnings status, and new migrants are most likely to be unemployed. Our analysis therefore contributes to challenging the consensus on high returns to primary education in developing countries.

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