Understanding Low Average Returns to Education in Africa: The Role of Heterogeneity across Education Levels and the Importance of Political and Economic Reforms

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.returns to education, wage reform, military, democratic reform

Disparities in labor market outcomes across geopolitical regions in Nigeria: fact or fantasy?

Differences in geopolitical regions of Nigeria are not debatable. However, there is no clear consensus on the dimension of these disparities. In this paper, claims of geopolitical region disparities in labor market outcomes are investigated using survey data from Nigeria between 1996-1999. Both descriptive and econometric analysis are used to test the null hypothesis that there are no significant regional differences in labor market outcomes in Nigeria. The results are surprising given the anecdotal evidence and general perception of disparities along this dimension. First, similar mean incomes across regions in Nigeria were noted. In addition, returns to education were not significantly different for Northern and Southern Nigeria. Given these findings, the null hypothesis cannot be rejected. There is no evidence of significant disparities in labor market outcome across geopolitical regions in Nigeria

Welfare Usage in the U.S.: Does Immigrant Birthplace and Immigration Status Matter?

The study of welfare participation in the U.S. prior to the 1996 welfare reform act and even afterward has focused on comparisons between native born and immigrant households. Analyses that have gone beyond this broad classification have focused on comparisons across race or with particular focus on particular groups like Hispanic immigrants. To the best of our knowledge, there is no study yet that tests for difference in welfare usage among immigrant groups and immigrant status. We do not expect welfare usage to differ among immigrant groups if we control for the factors that should predict welfare usage. Similarly, if immigration status does not prevent welfare usage for certain immigrants, then ceteris paribus, we do not expect welfare usage to differ among immigrant based on status. We investigate these possibilities by testing three related hypothesis using probability models. Our results suggest that birth place matters and the probability of welfare usage is not the same for all groups. We also find that for some birthplace groups, citizen and non-citizens differ with respect to welfare usage. Finally, we find that post welfare reform, the probability of being on welfare in comparison to U.S. born increased for all immigrant groups and these increases differed across groups. We provide possible explanations for our unexpected results.immigrants, welfare, welfare reform, immigrant status

Brain Drain, Waste or Gain? What We Know About the Kenyan Case

Over the last three decades, Kenya and many other countries in Sub Saharan Africa (SSA) have experienced rapid emigration to the developed world. The general view is that emigration from developing countries especially Africa has led to brain drain and brain waste. However, recent research on emigration from Mexico provides evidence of significant gains from emigration. This recent finding highlights the importance of looking at individual countries\u27 diasporas. In this review paper, I focus on trends in the Kenyan diaspora. More importantly, I summarize what we know from the literature and data on Kenya with respect to issues of brain drain and waste. Based on present evidence, I find that Kenya has experienced significant brain drain and waste. However, the rates of both brain drain and brain waste are on the decline for Kenya. According to a report by the World Health Organization (WHO), more than 4 million additional health professionals are urgently needed in 57 countries, 36 of which are in Sub-Saharan Africa (SSA) (World Health Organization, 2006). This report states that not enough health workers are being trained or recruited where they are most needed. Moreover, an increasing number are joining a brain drain of qualified professionals who are migrating to better-paid jobs in richer countries

The Role of Information and Institutions in Understanding the Black-White Gap in Self-Employment

It has been well documented in the literature that ethnicity matters significantly in the determination of self-employment rates. In particular, African-American self-employment rates lag far behind rates for other racial groups. Similarly, the literature also provides evidence of the long lived nature of institutions and the link between institutions and decision making. After controlling for the appropriate factors that can lead to self-employment differentials, we provide an explanation for the self-employment gap that still exists between African-Americans and White Americans. We focus on the important role of repeated negative institutional shocks and how such shocks influence the development of an information matrix as well as the transmission of information across time and generations. We show that African-Americans who were less likely to be influenced by negative institutional shocks and the information stock created from these experiences, have similar self-employment rates to comparably situated White Americans.African-American, institutions, information, self-employment

Within and between gender disparities in income and education benefits from democracy

There is data evidence that welfare has improved post democracy in Nigeria. However, the distribution or concentration of the benefits in subgroups of the population is unknown. In this paper, the question of differential welfare impacts, across and within gender, post democracy in Nigeria is explored. I make use of simple econometric tools to test two null hypotheses. First, there is no disparity in the income and returns to education benefits of the shift to democracy across gender in Nigeria. Second, there are no within gender disparities of the shift to democracy on income and returns to education in Nigeria. From the results, both null hypotheses are rejected. Though men and women benefited from reforms post democracy, gender differences exist. Specifically, I find on average higher income benefits for men post democracy. Nigeria. However, disparities in income benefits are at lower levels of education. Men and women have similar income benefits at the tertiary level. Interestingly, I find the reverse when considering returns to education. On average, women experienced a greater change in returns to education post democracy in Nigeria but this disparity is primarily at the tertiary level. I also find inequality has increased post democracy in Nigeria, more so among women than men

Understanding low average returns to education in Africa: the role of heterogeneity across education levels and the importance of political and economic reforms

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

Black-White Gap in Self-Employment in the U.S.: Do Cohort and Within Race Differences Exist?

In this paper we ask three questions: First, is there evidence of a Black-White gap in self-employment between 1994-2002 and could the inclusion of the White immigrant population be driving this result? Second, do within race differences in self-employment exist among the U.S. born? Finally, do cohort differences in the Black-White self-employment gap exist among the U.S. born? These questions are based on some of the regression findings in our earlier paper focused on the role of information and institutions in understanding the Black-White gap in self-employment. We find that the Black-White self-employment gap is not driven by the existence of White immigrants in the data set. In addition, we find that within race and cohort differences exist in the Black-White self-employment gap. A subgroup of U.S. born African-Americans have a self-employment probability that is identical to that of U.S. born White-Americans. In addition, younger cohorts of African-Americans have a much smaller self-employment gap than do older African-Americans.self-employment, disparities, black-white gap

Conflict and its Impact on Educational Accumulation and Enrollment in Colombia: What We Can Learn from Recent IDPs

Forty years of low-intensity internal armed conflict has made Colombia home to the world's second largest population of Internally Displaced Persons (IDPs). The effect of being directly impacted by conflict on a child's educational accumulation and enrollment is of particular concern because of the critical role that education plays in increasing human capital and productivity. This paper explores the educational accumulation and enrollment gap created by being directly affected by conflict. First, we show that children living in municipality with high conflict have a gap in education enrollment and accumulation. However, this gap is much smaller than the attainment and enrollment gap for those directly affected by the conflict (IDPs). We estimate the education accumulation and enrollment gaps for IDPs in comparison to non-migrants and other migrants respectively. Our results suggest significant education accumulation and enrollment gaps for children of IDPs that widens to over half a year in secondary school. The disparity in effects when we focus on direct exposure to conflict versus living in a municipality with conflict suggests a need to be careful when using the latter to estimate the impact of conflict.educational attainment, school enrollment, Colombia, internal displacement, conflict

Coming to America: Does Immigrant's Home Country Economic Status Impact the Probability of Self-Employment in the U.S.?

This paper examines the impact of home country economic status on immigrant self-employment probability in the U.S. We estimate a probability model and find that, consistent across race, immigrants from developed countries are more likely to be self-employed in the U.S than are immigrants from developing countries. This result is unexpected given previous research which suggests that immigrants from countries with high levels of self-employment tend to be more involved in self-employment in the U.S. Developing countries on average have higher self-employment rates than do developed countries but our research shows that immigrants from developing countries have similar or lower self-employment probabilities relative to native born White Americans, whereas immigrant from developed countries have significantly higher self-employment probabilities relative to native born White Americans. We provide two potential explanations for this result. First, immigrants from developed countries may indeed have more and better access to start-up capital from their country of origin. Second, institutional arrangements in the developed world may be similar across countries allowing immigrants from developed countries to have an informational advantage over immigrants from developing countries.self-employment, immigrant, home country, entrepreneurship