Heterogeneity in Returns to Schooling in Cameroon: An Estimation Approach Considering Selection and Endogeneity Bias
Date
2021-07-12
Authors
Issofou, Njifen
Aicha, Pemboura
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
The aim of this study is to show that the rate of the returns to education is
not uniform, and that some people benefit most and others least from their
education on the labour market. Using data from a survey on employment
and the informal sector, the study provides evidence of the heterogeneity of
the returns to education in Cameroon. By controlling for any selection bias
attributable to endogenous choices of the employment sector in the school-towork transition and the potential endogeneity of the education variable related
to the individual unobserved heterogeneity, we used the ordinary least squareswith robust standard errors and the quantile regression technique to estimate the
Mincer earnings function. This estimation procedure based on the control function is
suitable because of the robustness of the instruments used. Overall, the study found
that the average rate of the returns of an additional year of education was 7.1%. The
results of the quantile regression model showed that the returns to education differed
according to the earnings quantile considered: they were highest for the highestpaid workers and lowest for the middle-income ones. In addition, the individual
unobserved heterogeneity was observed to decrease the returns to education. The
Wald test for the equality of coefficients significantly confirmed the heterogeneity of
the returns to education by quantile. The study’s findings have many socioeconomic
policy implications.