Returns to education and regional earnings differentials in Egypt

Abstract

This paper presents an empirical investigation of the determinants of labour market earnings in Egypt. Using Human Capital model, the determinants of regional earnings and returns to education by region are examined. The relative importance of individual and regional effects on earnings inequality is assessed. The main findings of the paper are: (i) the estimated rates of return to education increase with rising educational levels; this is different to the common pattern found in most developing countries. (ii) there are substantial variations in returns to education across regions. (iii) estimates point to the importance of credentials in the Egyptian labour market. Keywords; wage differentials, earnings inequality, developing countries, education