The returns to vocational training and academic education: Evidence from Tanzania

In this paper we ask what can account for the continuing strong preference for academic education in Africa where the level of development is so low and there are few wage jobs and which form of educational investment, the academic or vocational, is most profitable. We argue that the answers to these questions are linked through the shape of the earnings function and the importance of firm effects. High levels of academic education have far higher returns than those available either from vocational or lower levels of academic. However at lower levels the vocational return can exceed the academic.Vocational and General education in Tanzania, manufacturing, training.

The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing

The returns to education remain a central concern for development policy. In developed countries there is evidence that the returns to education have been rising.Evidence for changes over this period for developing countries is limited. In this paper we use data from Kenya and Tanzania to estimate returns to education for manufacturing workers and examine how these returns have changed from 1980 to the late 1990s. We find strong evidence that the earnings function is convex for both countries and document significant differences in the earnings profiles across cohorts, typically with stronger convexity amongst the young. We also find evidence of increasing convexity over the 1990s in Tanzania, but remarkable stability in Kenya.We test for the importance of ability bias and find convexity robust to endogeneity. Treating education as an endogenous explanatory variable generally results in higher estimated returns to education than what is obtained by OLS. Potential reasons for this result are discussed.Returns to education, Africa, Kenya, Tanzania, manufacturing

The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing

The returns to education remain a central concern for development policy. In developed countries there is evidence that the returns to education have been rising. Evidence for changes over this period for developing countries is limited. In this paper we use data from Kenya and Tanzania to estimate returns to education for manufacturing workers and examine how these returns have changed from 1980 to the late 1990s. We find strong evidence that the earnings function is convex for both countries and document significant differences in the earnings profiles across cohorts, typically with stronger convexity amongst the young. We also find evidence of increasing convexity over the 1990s in Tanzania, but remarkable stability in Kenya. We test for the importance of ability bias and find convexity robust to endogeneity. Treating education as an endogenous explanatory variable generally results in higher estimated returns to education than what is obtained by OLS. Potential reasons for this result are discussed.Returns to education, Africa, Kenya, Tanzania, manufacturing

TRADE FACILITATION, ICT AND MANUFACTURED EXPORT PERFORMANCE IN TANZANIA: WHAT IS THE MISSING LINK?

This study assesses the missing links between ICT and trade facilitation in influencing exports and productivity of Tanzanian manufacturing enterprises. It focuses on testing the hypothesis that application of Information and Communication Technology (ICT) at firm level and adaptation of appropriate trade facilitation policies have a causal impact on the quality and quantity of manufactured exports, productivity and investment. The main argument is that, despite the remarkable and impressive record of Tanzanian economic performance and efforts to attain a knowledge economy, performance of the manufacturing sector has stagnated. Low levels of technology usage, inadequate and low levels o

Job creation in Tanzania : what types of jobs are being created and where?

The project aims to provide a better understanding of labour market adjustment at the firm, sectoral and aggregate levels in Tanzania. The paper is a work in progress. It proposes an econometric model, and further analysis of the enterprise and household level information, which will be undertaken after completion of data cleaning and validation

Job Creation in Tanzanian Labour Market: Where &What Types of Jobs Are Being Created?

This paper examines the process of job creation in Tanzania by addressing the question: what types of jobs are being created and where? To address these questions the paper’s conceptual framework and strategies consider the interrelation between the number of jobs that can be created in a labour market segment, the quality of jobs in terms of human capacity requirement, productivity and remuneration. The specific method for capturing job creation used by the paper are estimates of the labour market, indexes of job creation and job destruction at sectoral level. The paper findings are that job creation in Tanzania is mostly happening in traditional agricultural sector and urban informal sector, as both employ over 90% of the working population. The absorption capacity in the formal sector jobs is very small and there are indications that it will remain so even in the near future. Large numbers of the jobs created are vulnerable jobs in which earnings are below US$2 a day, which is below the working poverty line. Findings also suggest that the fastest growing sectors such as mining and tourism have low levels of employment. Tourism has the highest total employment effect in the economy than any other sector. The results further show that agriculture has less employment multiplier effect, although it provides the largest direct employment opportunity. The paper concludes that although unemployment in Tanzania is low, the types of jobs created are still not immune to poverty incidence. The earnings level in most of the employing sectors falls below the working poverty line of US$1-5 per day. Therefore, a high rate of growth in modern sector employment can only be generated by high GDP growth, typically spearheaded by industrialization, modern services, finance, business and the related sectors

Outcomes of Worker Effort and Supervision in Tanzanian Labour Market

This paper examines the impact of work effort and supervision in the Tanzanian labour market. In particular it focuses on the extent to which observed earnings and productivity of a worker might be influenced by both the individual effort of a worker and intensity of supervision. To assess the earnings effect of work effort, the paper estimates the hourly earnings equation, which includes work effort and monitoring intensity among the determinants of the hourly earnings. The estimates control for unobserved firm specific effects and GMM production functions. Key findings of the paper are that a worker who exerts higher effort at work increases hourly earnings by about 27 per cent. Estimates of productivity affect via GMM shows that increase in the monitoring intensity increased the gross output per employee by about 34 per cent. The estimated coefficient is stable even after a range of factors are controlled for. The paper concludes that labour market reforms introduced in Tanzania on increased autonomy and flexibility of firm level work supervision and pay have positive outcomes for both employers and employees

Determinants of real earnings and productivity in Tanzanian manufacturing firms

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Macroeconomic Environment and Firm level Performance in Tanzania

This paper examines the influence of macroeconomic environment on firm level performance. Specifically, it assesses the influence of macro variables of Taxation, corruption, availability of business support, cost of domestic raw materials, inflation, cost of imported raw materials, access to credit, interest rates and insufficient market demand on firm level productivity. The paper attains the empirical analysis via estimating a Cobb Douglas production function. The rich panel data set used enables control for unobserved time invariant firm specific attributes that might be influencing the estimations.  Paper findings are that macroeconomic environment has strong impact on observed firm performance.  The paper does not find any significant effect of inflation, interest rate and corruption on firm level performance.  The results are not statistically significant even after control for unobserved characteristics using panel data estimations techniques of Generalized Methods of Moments.  The results lead to a conclusion that to facilitate firm level performance efforts need to focus on reducing tax burden, increased business support, reduced cost of imported raw materials as well as access to credit