Working Paper 110 - Education and Employment in Malawi

Abstract

This paper analyzes the relationship betweeneducation and employment in Malawi, usingdata from the 2004-05 Integrated HouseholdSurvey (IHS-2). For both men and women,education is the passport to formalemployment and leads to higher hourlyearnings. Within regular wage employment,secondary education is associated with a123 percent wage premium, and universityeducation with a 234 percent wage premium(relative to illiteracy). In both rural and urbanareas, income is positively correlated withspecialization in regular wage employment.For example, in urban areas 60 percent of thehouseholds who derive at least 75 percent oftheir income from regular wage employmentbelong to the highest quartile of the incomedistribution. This reflects the relative scarcityof human capital. Among prime age males(25 to 39 years old), only 10 percent havecompleted secondary education. For womenin the same age group, the situation is evenworse, with the rate of completion ofsecondary schooling as low as 3 percent.The analysis of school enrolment highlightsthat teenage women experience high dropoutrates, which prevent greater femaleenrollment in higher education, and thereforeconstrain future participation in the bestforms of employment.