Education, the labour market and welfare in East Africa

This thesis consists of three empirical essays on issues relating to the analysis of the link between education and the labour market in East Africa. The first essay investigates whether returns to schooling differ according to the choice of the measure of earnings and the different periods in which workers are paid (daily, weekly, and monthly). Using comparable data from the Living Standards Measurement Study (LSMS) for Malawi, Tanzania, and Uganda, and accounting for endogeneity using Gaussian Copula and Heckman selection models, we show that pooling/aggregating earnings to different common measures produce different estimates of returns to education. Estimating separately for each pay period, the analysis also reveals that returns to education differ significantly. The analysis suggests that estimating returns separately for different periods is more reliable than pooling. The second essay employs Recentered Influence Function (RIF) Regressions to examine the distributional effect of education on earnings in East Africa. It investigates how the distributional effect of education on earnings differs according to the different periods in which workers are paid, using the same dataset as the first essay. Results show that, in all three countries, there is a significant difference in the distribution of earnings between pay periods, and thus the role of education in explaining earnings inequality differs across the pay periods. Generally, the effect is more substantial for workers reporting monthly earnings than their daily and weekly counterparts. Like for the first essay, the second essay also reiterates the need to estimate for each period separately for more reliable results. The third essay examines whether the welfare difference between youth and adult headed households between 2001 and 2018 is attributable to differences in educational attainment following Universal Primary Education (UPE). The RIF decomposition method applied to the household budget survey (HBS) data for 2001 and 2018 reveals that the increase in youth educational attainment between 2001 and 2018 significantly explain the difference in welfare between the 2001 and 2018 youth cohorts. The findings also show that differences in educational attainment are significant factors explaining differences in welfare between youth and adults in each year. We find no evidence that the difference in welfare between the youth and adults and between youth in 2001 and their 2018 counterparts can be attributed to the difference in returns to education