dc.description.abstract | Among Sub-Sahara Africa countries, Kenya has had a
rapid educational expansion. This dissertation
provides empirical analyses of the impact of education on labor earnings in Kenya, based on surveys of
manufacturing firms and a survey of households in the 1990s. It consists of four papers.
Paper 1 examines whether real earnings and private returns to education in manufacturing
labor market changed over the 1990s. Results indicate that, real earnings standardized for differences in
observed worker and firm characteristics rose over
the survey period. But returns to human capital
were constant. Further, the results indicate that returns to education are highest for workers in the top
part of the earnings distributi
on, suggesting that, education
worsens earnings inequality among
manufacturing workers.
Paper 2 uses the 2000 wave of the manufacturing firms survey to examine whether failure to
control for family background in earnings functions
, or to treat education as endogenous to wage
formation, results in significant bias in estimates of
private returns to education. Parental education has
significant impact on a worker’s education, and es
timates of the effect of education on wages in
Kenya’s manufacturing that do not control for parental education are upward biased. When education is
instrumented, results suggest that, standard estimates of private returns to education may be downward
biased if endogenous schooling is not modelled. But th
is hinges on the validity and quality instruments.
Paper 3 analyses a household survey to identify the impact of education on employment and
earnings. All levels of education reduce the chances of agricultural employment, while higher
education reduces the chances of en
try into the informal sector also
. Perhaps it is because education
raises private and public sectors entry probabilities. Decomposition results indicate that, differences in
individual and household characteristics explain a substantial part of the women-men gap in sector
entry probabilities. Returns to primary education are highest in the informal sector while returns to
secondary education are highest in the private sect
or. Women have higher returns to education than
men, and selectivity controls in the earnings functi
on indicate no evidence of se
lectivity bias except for
women in the public sector.
Paper 4 also analyses a household survey to examine the impact of education on households’
economic activity combinations and incomes. Results suggest that, as education increases in the
household from primary to secondary level, the tende
ncy is to diversify inco
me-generating activities.
At higher levels of education, households tend to
generate income from wage employment only.
Further, the impact of education on total earned income is substantial. And while the largest impact of
education is on household wage income, lower education has a notable impact on household farming
income. This result is important, as many primary graduates are likely to enter the farming sector. | en |