Estimating Returns to Education in Off Farm Activities in Rural Ethiopia

Course ID
Ethiopian Economics Association (EEA)
Verwimp Phillip


I have used an extended version of Mincer’s original model to estimate the returns to schooling in rural Ethiopia. In a first step a multinomial log it model is applied to distinguish between for groups of people,(1) full-time farmers, (2) part-time farmers and part-time wage workers,(3) part-time farmers and part-time traders and (4) full-time non-farmers. In a second step, a correction for sample selectivity is made using the Lee-Heckman method and the returns are estimated. The results show that returns on schooling are high in group (4)and lower in groups(2) and (3). Entry in well-paid jobs is constrained for non-educated people. Women are particularly well represented in the third group but strongly underrepresented in the fourth group. The estimation shows overall that education is a worthwhile investment in rural Ethiopia and the fact that households under invest in education can be attributed to the lack of resources at the household level.

Corporate Author:Ethiopian Economic Association/Ethiopian Economic Policy Research Institute (EEA/EEPRI)
Publisher:Ethiopian Economic Association (EEA)
Primary Descriptors:Adult education

Secondary Descriptor:Literacy

Geographic Descriptors:Ethiopia
Cataloge Date:03/02/2013
Broad Subject heading:Fundamental education
Call Number:330.05 ETH JOU
Serial Key Title:Ethiopian Journal of Economics
Publication catagory:Ethiopian Journal of Economics
Content type:EEA Publication
Year:October, 1996
Publication date:1996-03-02 00:00:00
Forum or Discussion date:2013-03-02 00:00:00
PDF file: Verwimp, Phillip_Estimating Returns to Education in OffFarm Activities in Rural Ethiopia.pdf
Place of publication:Addis Ababa, Ethiopia
Type of material:Serial (Journal)
Current frequency:Semiannual
Author: Verwimp, Phillip

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