Does schooling make sense? A household perspective on the returns to schooling for self-employed, farmers and employees in Egypt.

Why do some children in the developing world choose to stay out of school? Is it mainly because poverty leaves them with no options or because schooling seems to offer them few benefits? The answers to these questions have profound policy implications. An empirical input into this discussion is the extent to which schooling can actually be perceived as a profitable option in various countries and, in extension, what factors influence the extent of this perceived profitability. When the usefulness of schooling is looked at from this perspective, some special considerations are motivated, as compared to when we look at the usefulness of schooling from the society's point of view. For example, we should consider all sectors that might be a relevant employment alternative for the individual, which for the developing world includes the self-employed in the agricultural sector, rather than only looking at the return to education for salaried workers, as is commonly done. It is also relevant to disaggregate the return for various degrees. On the other hand, the various concerns for causality issues, which are of great relevance for growth-related research, are only of concern for the usefulness of schooling to the extent that individuals are aware of these issues and take them into account in their decision-making. Egypt is a country that has been characterised by a low and unequal educational attainment, although great progress has been made in later years. Previous studies on the return to education in the country, for salaried labour, have indicated that the country also has been characterised by relatively low returns. This thesis utilises the 1997 Egypt Integrated Household Survey and it finds that the picture of low returns remains if the analysis is broadened and refined along the lines indicated above. Several reasons for these low returns are discussed, e.g. quality problems with the school system and, for the self-employed in agriculture and the small-scale sector, a history of policy bias against them. It is also speculated that these results might have at least some relevance for the evolvement of attainment in Egypt