Education and Labour Market Outcomes in Sub-Saharan West Africa Mathias Kuepie* Christophe Nordman** and François Roubaud** March 2006, preliminary Abstract: The purpose of this paper is to study the effects of education on urban labour market participation and earnings in seven West African capitals. Although the effect of education on earnings differs depending on the employment sector and the type of job held, it is also a determinant of individual choices made upstream, i.e. when the decision is made to enter the labour market, and especially sector choices. We show that education clearly increases earnings on the labour markets in Abidjan, Bamako, Cotonou, Dakar, Lomé, Niamey and Ouagadougou. Although it does not always guard against unemployment, it does open the door for the most well-educated to get into the most profitable niches, which are found in the formal private and public sectors. Our study also makes a contribution by showing that human capital, including at advanced levels, substantially increases the gains in the informal sector in most of these WAEMU cities. This finding has considerable political implications: the entry of highly educated workers into the informal labour market is far from a loss in terms of household and government investment in education. JEL Classification: J24, J31, O12 Key words: Returns to education, urban labour markets, earnings, informal sector, Sub-Saharan West Africa DIAL, CEPS/INSTEAD. E-mail: [email protected] IRD, DIAL, 4 rue d’Enghien 75010, Paris, France. E-mail: [email protected] (corresponding author); [email protected] * ** 1. Introduction Studies of the external efficiency of education systems look at the impact of the education received by individuals once they have left their school or training establishment to continue their lives as adults in society1. There are two types of impacts: economic in the narrowest sense and social in the broader sense. These can be interpreted using two further dimensions, individual and collective. This study focuses solely on the economic dimension of the external efficiency of education. Analyses of the individual effects of education in the economic sphere often study the earnings differentials associated with different levels of human capital endowment. For example, classic human capital theory (Mincer, 1974; Becker, 1975) has substantial implications for poor countries because it interprets income differences between individuals on the labour market. The Mincer earnings model derives directly from the theory’s assumption that individuals are paid based on their marginal productivity. This suggests that investment in education is an explanatory factor in the distribution of earnings. The classic theory effectively amounts to considering that wage differentials between individuals are due to their differences in education alone, since the market equalises individuals’ earnings, at equal levels of training. Under this assumption, a strong economic policy implication is that if inequalities in income distribution are to be reduced in a given country, the starting point is to reduce inequalities in access to education, given that income inequality seems to be higher when education is less equally distributed. Education policies can help reduce poverty by increasing the earned income of the most highly educated workers. It is therefore useful to know the returns to education for individuals with different living standards in different countries. If returns to education are high for the poor, poverty reduction policies designed to promote equal opportunities in access to schooling would be appropriate. However, if investment in education is mainly of benefit to the rich, then improving access to the education system may generate sustained growth, but could well increase inequalities in income distribution without actually reducing poverty. There have been numerous objections and criticisms regarding the assumption that education and productivity are the only determinants of differences in remuneration. The first models were built for By way of comparison, “Analyses on the internal efficiency of education systems concern the school processes and the way the teaching establishments operate: generally speaking, they compare the schools’ activities and organisational methods with the results obtained by pupils whilst they are still in the system, looking for the most cost-effective situations.” (Mingat and Suchaut, 2000, p. 170). 1 2 industrialised countries (mainly the United States). Yet many authors have demonstrated, particularly in an African context, that the traditional theories positing the levelling of income levels among individuals with identical levels of human capital endowments do not fit when the markets are imperfect or segmented. Markets in most African countries are not only imperfect, but the nature of employment contracts also has a significant effect on the relationship between human capital characteristics and earnings. In particular, it is widely acknowledged that there are four types of labour markets in developing countries: rural, public, formal private and informal. These markets each have their own characteristics, such as job seasonality, uncertainty of demand, nature of contracts and structure of wages and earnings (Adams, 1991; Ray, 1998; Hess and Ross, 1997; Schultz, 2004). However, many studies of the external efficiency of education in these countries (particularly the match between training and employment or the private returns to education) overlook the fact that the existence of different employment segments, especially in the rural and informal sectors, can have major implications in terms of the role of education in labour market integration. Vijverberg (1995) observes that some types of employment, such as selfemployment, cannot be linked to the individuals’ credentials, or to a pay scale, meaning that education can only play a minor role in explaining individual earnings levels. Bennell (1996) notes that many studies of developing countries are based on data for formal-sector employees and do not take into account income in rural and informal sectors where returns to education are probably very low. Glewwe (1996) also finds that the wage structure in the private sector reflects the impact of education on worker productivity more than the wage structure in the public sector. The purpose of this paper is to study the effects of education on urban labour market participation and earnings in seven West African countries. Although the effect of education on earnings differs depending on the employment sector and the type of job held, it is also a determinant of individual choices made upstream, i.e. when the decision is made to enter the labour market, and especially sector choices. Hence, it is widely accepted that observable individual characteristics (such as human capital in general), but also unobservable individual characteristics, influence both decisions to participate and the level of individual earnings. Based on first-hand, recent, comparable household surveys in seven capitals in French-speaking Africa of the WAEMU, we broaden the scope and refine the indicators generally used to assess the efficiency of education for labour market integration in Africa. We set out in particular to reestimate the determinants of earned income, especially the effect of education, while 3 differentiating individuals by their institutional sector (public/formal private/informal private). Using our unique household survey data, we can correct for possible sampling-related estimation biases regarding paid-work participation and sector choices. To our knowledge, this is the first time that such a comparative study of several African countries has been made based on surveys using identical methodologies. The paper is set out as follows. Section 2 describes the data and survey design. Section 3 presents our methodology and the econometric models. Section 4 analyses and discusses the findings. Section 5 presents our conclusion. 2. Presentation of the data Our data are taken from an original series of urban household surveys in West Africa, the 1-2-3 Surveys conducted in seven major WAEMU2 cities (Abidjan, Bamako, Cotonou, Dakar, Lomé, Niamey and Ouagadougou) from 2001 to 2002. The surveys were carried out by the relevant countries’ National Statistics Institutes (NSIs), AFRISTAT and DIAL as part of the PARSTAT Project.3 The surveys cover the economic city, i.e. the “administrative city” and all the small towns and villages directly attached to it and with which there are frequent exchanges. As suggested by its name, the 1-2-3 Survey is a three-phase survey. The first phase concerns individuals’ sociodemographic characteristics (including education and literacy) and labour market integration. The second phase covers the informal sector and its main productive characteristics. The third phase focuses on household consumption and living conditions. The same methodology and virtually identical questionnaires were used in each city, making for totally comparable indicators. Our study uses solely the Phase 1 data. Phase 1 of the 1-2-3 Survey is a statistical employment survey designed to: WAEMU: West African Economic and Monetary Union. The survey was not carried out in GuineaBissau 3 Regional Statistical Assistance Programme for multilateral monitoring sponsored by the WAEMU Commission. 2 4 - Provide the main indicators to describe the situation of individuals and households on the labour market. It covers household employment and economic activities, especially in the informal sector; - Serve as a filter survey to identify a representative sample of informal production units, which are then surveyed in Phase 2. The following presents a brief description of the sampling plan, the content of the questionnaires and the handling of the tricky question of income, which plays a key role in this study. The sampling plan The detailed methodology is described in Brilleau, Roubaud and Torelli (2004, 2005). The sampling plan chosen used the classic technique of two-stage area sampling. Primary and/or secondary stratification was conducted where possible. The primary sampling units were small area units: Enumeration Areas (Zones de Dénombrement), Census Districts (Districts de Recensement), segments or even Enumeration Sections (Sections d’Enumération), depending on the country. Each area unit contained an average of 200 households. In general, a full list of these units was available from the last population census. The survey periods were as follows: 2001 for Cotonou, Ouagadougou, Bamako and Lomé; and 2002 for Abidjan, Dakar and Niamey. Following a stratification of the primary units based on socio-economic criteria, 125 primary units were sampled with probabilities proportional to their size. An exhaustive enumeration of the households in the selected primary units was then conducted. Following a stratification of the secondary units where possible, systematic random sampling was applied to sample approximately 20 households with equal probabilities in each primary unit. The theoretical household samples were made up of 2,500 households in each of the seven cities, with the exception of Cotonou where the number was able to be raised to 3,000. A full 17,841 households actually answered the questionnaire. This corresponds to 93,213 individuals and 69,565 people aged ten and over (which is the potential labour force) for whom an individual questionnaire was completed. Table 1 below describes the theoretical and actual samples obtained for each city. 5 Table 1. PARSTAT survey sampling Cotonou Total number of primary units Number of primary units in the sample Initial number of households in the sample Final number of households in the sample Number of individuals in the sample (inc. visitors) Number of individuals aged ten and over in the sample Ouagado ugou Abidjan Bamako Niamey Dakar Lomé Total 464 713 2,483 993 368 2,041 129 7,191 125 125 125 125 125 125 125 875 3,000 2,500 2,500 2,500 2,500 2,500 2,500 18,000 3,001 2,458 2,494 2,409 2,500 2,479 2,500 17,841 11,574 13,756 11,352 13,002 14,557 19,065 9,907 93,213 8,967 10,295 8,682 9,061 10,141 14,871 7,548 69,565 Source: 1-2-3 Surveys, Phase 1, 2001-2002 (INS, AFRISTAT and DIAL); seven WAEMU cities. In general, sample size was much higher than that observed in most of the urban household surveys with the result that the findings are more reliable. The sampling strategy used meant that the standard estimator quality indicators could be rigorously calculated (see Brilleau, Roubaud and Torelli, 2005)4 The questionnaires The questionnaire was made up of two forms: a household section covering all the sociodemographic characteristics of each household member, housing conditions and the household’s durable goods; and an individual questionnaire for each individual aged ten or over. The individual questionnaire was made up of six modules designed to define each person’s labour market situation and therefore to measure, among other things, what is termed the “external” efficiency of education. For example, the following aspects can be studied: employment status (employed worker, unemployed, out of the labour force), the characteristics of the main job (job status, seniority, earnings, etc.) and of the employer businesses (institutional sector, line of business, size, etc.), the characteristics of the secondary job, and unemployment (length, type of job sought and mode). Also included were a certain number of career path elements (last job held and situation of the interviewee’s father when he was 15 years old) and unearned income. 4 Table A1 in the appendix presents some composite labour market indicators for the seven capitals. 6 Although no specific module was included on education, this field was covered by a series of questions put to each household member5 concerning: school attendance (current or past), the school level reached, the number of completed years of education, the qualifications obtained (differentiating between general and vocational education), the type of school attended in the last year of schooling (state, private denominational or private non-denominational), and the interviewee’s father’s level of education. Constructing the income variable It is not easy to study earnings in an African urban environment since a large majority of workers work in the informal sector where there are no accounts or pay slips and individuals are naturally reticent to disclose their incomes (this is not specific to Africa). Two strategies were adopted for the 1-2-3 Surveys to at least partially overcome these problems: - For non-wage earners (self-employed and employers), the interviewers were asked to help them reconstitute their earnings by recapping incomings and outgoings over a reference period to which the interviewee could relate. Following this exercise, non-wage earners’ incomes were translated into a monthly sum in the questionnaire; - The individuals who were unable or unwilling to disclose their exact earnings were asked to give a bracket, defined by multiples of the minimum wage in force. This strategy produced the following results: Table 2. Method of declaring the variable relating to income from the main job (%) Detailed income Income bracket Unpaid worker Income not disclosed Total Cotonou Ouagad Abidjan ougou 51.2 42.5 53.2 32.3 44.4 34.1 14.6 7 9.8 2.0 6.1 2.9 100.0 100.0 100.0 Bamako Niamey 54.3 35.2 4.1 6.4 100.0 42.1 32.9 11.5 13.4 100.0 Dakar Lomé Total 38.3 41.5 11.6 8.7 100.0 55.0 31.2 12.3 1.5 100.0 48.1 36.2 10.3 5.8 100.0 On average, nearly half of all employed workers (48%) declared a precise income figure and over one-third (36%) gave a bracket. Less than 6% of workers gave no information. For both the workers who refused to disclose their earnings and those who gave only 5 See Brilleau, Roubaud and Torelli (2005) for a detailed description of the questionnaires. 7 income brackets, earnings were imputed by a econometric estimation based on an income equation. An income model was first of all estimated for the employed workers who disclosed their precise earnings based on the individuals’ characteristics. The explanatory variables for income are as follows: age, gender, schooling, socio-economic group, institutional sector, seniority, location, type of contract, number of hours worked, steady or irregular job, and type of payment. The values predicted from this model were imputed for all individuals who did not disclose their earnings and those who gave an income bracket. Random sampling was conducted for these latter individuals and the result added to the estimated income until the sum obtained came within the bracket declared by the interviewee. 3. Methodological approach Our methodological approach consisted of estimating different models to evaluate the impact of education in its different forms (years of education, type of school attended, level reached, and qualifications obtained) on (i) the conditions for labour market integration (participation and sector choices) and (ii) earned income. Our surveys enabled us to estimate Mincer earnings models taking account of the selection effects associated with the individuals’ participation and sector choices. Moreover, the wealth of the variables available meant that we were able to take into account part of the income heterogeneity not associated with education in the earnings function. Hence the following information was included in the different models to better pinpoint the effect of education: age, gender, potential work experience, seniority in the current job, migratory status, marital status, dummy variables for religion, per capita income in the individual’s household, the individual’s relationship to the head of household, and the household’s dependency ratio. Bear in mind that the comparative nature of our data on seven capitals gives our study a unique slant in that the effects of education can be studied in a uniform manner for all 8 the countries. This is because the variables are measured in the same way since they are taken from surveys using identical sampling plans and questionnaires. Two types of econometric models are used for this study: discrete choice models (binary and multinomial logit) to estimate the effect of education on the probability of being unemployed and of holding a job in the informal sector and the effect of education on sector choices (out of the labour force, public sector, formal sector or informal sector), and the log-linear earnings model with correction of any selection biases to estimate the returns to education. Modelling the sector choice Let j be the different occupational situations (j = 0 to 3): 0 = no work, 1 = public sector, 2 = formal sector, 3 = informal sector. Each individual i will normally compare the different “levels of utility” associated with the different “choices”6 and opt for the alternative that maximises his utility Uij. We posit that the utility of choice j is Uij =βj’Xi + εij where Xi is a vector of observed individual characteristics, βj is a vector of parameters to be estimated and εij is a random error term. The probability of individual i participating in sector j is equal to the probability of the utility of sector j being greater than that associated with the other sectors: Prob(Uij > Uik) for k ≠ j; k = 0, 1, 2, 3 (1) By replacing Uij and Uik with their expression, we obtain: Prob(βj’Xi + εij > βk’Xi + εik ) = Prob(βj’Xi - βk’Xi > εik -εij) for k ≠ j; k = 0, 1, 2, 3 (2) The form of the participation equation will depend on the assumption adopted as regards the distribution of error terms. If we assume that the errors are independently and identically distributed with a Weibull distribution, then the difference between the errors follows a logistic distribution and the probability of individual i choosing sector j The notion of choice needs to put into perspective here, especially when the labour market is segmented as is the case in Africa: although certain individuals may be able to choose from different alternatives, a large majority are faced with the impossibility of gaining access to certain highly rationed jobs (public and modern private) and therefore have to enter the informal sector. In this case, they do not really make a choice. The assumption could be made that, for these individuals, the utility associated with the inaccessible jobs is zero and that they therefore always “prefer” the informal sector to the modern sector. 6 9 is expressed by: Prob(Yi=j)=exp(βj’Xi)/Σkexp(βk’Xi) with k ranging from 0 to 3. (3) For the model to be identifiable, we posit by convention β0=0. The parameters of the estimates hence represent the effect of a given characteristic on the chances of being in a segment rather than not working7. The binary logit is deduced from the multinomial based on the assumption of two exclusive choices (k=0 or k=1). Modelling the earnings equations with selection bias correction Modelling the earnings functions follows on from the estimation of the sector choice equations and is therefore the next step. Let’s say, as above: Uij =βj’Xi + εij (4) and Yij= ζj’Zi + ηij (5) Yij denotes the income that individual i earns by working in sector j where, as above, j=1 (public sector), 2 (formal sector) and 3 (informal sector). Zi is the vector of observable individual characteristics (including education), ζj is a vector of parameters to be estimated and ηij is an error term. The aim is then to estimate the coefficients ζj for each sector. Yj is only observed if sector j is chosen and, therefore, ηj and εj are not independent. In this case, the OLS estimator is potentially biased. One of the ways of correcting this bias is to add a correction term to the earnings equation using Lee’s method (1983). This technique is a generalisation of the Heckman correction (1979) when the first-stage choice equation has several modalities. The inverse Mills ratio introduced into the earnings equation for each sector sub-sample yields consistent estimators and, in our case in particular, estimators of the effect of the education variable on the levels of individual earnings. However, this Lee correction In our case, this category corresponds to the individuals who did not declare positive earnings for the reference month. 7 10 method was questioned because it is based on a strong assumption regarding the joint distribution of error terms in the equations of interest (Bourguignon, Fournier and Gurgand, 2004). Nevertheless, the alternative methods proposed by these authors were inconclusive in the case of our data. The Lee method often performed better considering the small size of our sector sub-samples. 4. Analysis of the findings We start by looking at the distribution of the stock of education in the seven cities studied. We then analyse the efficiency of education in terms of exits from unemployment, integration into the different labour market segments (formal/informal), and remuneration. 4.0 Overview of the level of education in the seven cities Education remains a rare factor The performance of the education system is found to be mediocre in all seven cities: over half (55%) of the individuals aged 15 and over either never attended school or attended school but did not complete primary school. Yet people are only considered to be literate as adults when they have completed primary school. On this basis, we estimate the proportion of literate individuals aged 15 and over in the WAEMU cities in the early 2000s at 45%. Moreover, these literate individuals’ level of education was extremely modest since nearly half of them did not complete fourth year/ninth grade (the end of middle school) and less than one quarter had completed secondary school and might have gone on to higher education. The distribution of individuals aged 15 and over by level of education in each of the cities taken individually is pyramid-shaped with a broad base and a very tapered tip. This is indicative of a high level of illiteracy (at least 44%) and high drop-out rates between and within education system levels. 11 Graph 1. Distribution of individuals aged 15 and over by education level and city Higher education Lomé Dakar Niamey Bamako Abidjan Ouagadougou Cotonou Total Secondary complete Vocational secondary Middle school complete or secondary incomplete* Primary complete or middle school incomplete* Primary incomplete* No schooling 0 10 20 30 % 40 50 60 70 * Did not reach the last year of that level of schooling Although the cities have a common curve, they also display differences. If we look at the base of the schooling pyramid, i.e. the individuals who did not start or complete primary school, Bamako, Niamey and Dakar are found to be the most disadvantaged from this point of view (Table 3 and Graph 1). Approximately 60% of the over-15s in these cities do not have the minimum level of schooling in terms of having completed primary school. Conversely, “only” 45% of the population lack this basic level in Cotonou and Lomé. Abidjan and Ouagadougou are in intermediate positions with respectively 56% and 51% of the population who did not start or complete primary school. Abidjan has the highest proportion (12.5%) of individuals at the top of the educational pyramid (secondary school completed or higher education), ahead of Cotonou (11%). The other cities post percentages ranging from 6.5% to 8.5%. Possession of the minimum human capital (i.e. at least completed primary schooling) also varies markedly by the two demographic identification variables of generation and gender (Table 3). Women are largely disadvantaged by gender in that nearly two-thirds (64%) did not complete primary school (as opposed to 45% of men). This rate rises to 68% in Dakar, Niamey and Bamako. Even in the cities with the longest-standing and most developed schooling (Cotonou and Lomé), women remain largely on the fringes: 59% did not complete primary school. 12 Table 3. Proportion (%) of individuals aged 15 and over who at least completed primary school Cotonou Ouagadougou Total 15-24 years 25-34 years 35-44 years 45-59 years 60 years &+ Total Men 15-24 years 25-34 years 35-44 years 45-59 years 60 years &+ Total Women 15-24 years 25-34 years 35-44 years 45-59 years 60 years &+ Total Abidjan Bamako Niamey Dakar Lomé Total 58.8 49.7 55.0 44.5 34.5 52.6 57.1 46.2 35.0 24.8 8.5 43.9 49.0 51.3 48.1 46.4 21.6 48.5 49.9 35.2 38.2 33.2 15.7 39.7 43.5 40.8 36.2 23.5 8.1 37.0 38.3 39.8 38.2 38.0 16.0 37.1 57.1 58.7 59.7 46.7 30.5 55.7 48.8 47.0 44.6 39.0 18.8 44.9 70.8 62.1 67.7 60.6 49.1 65.4 64.8 54.9 41.4 31.2 14.0 50.8 63.1 60.1 57.6 56.1 32.6 59.3 61.1 43.7 45.8 41.1 19.7 48.0 47.4 49.0 45.1 30.1 12.6 42.5 43.0 45.7 48.5 47.5 26.3 43.9 71.1 74.6 77.2 63.6 55.2 71.9 59.1 56.4 54.9 48.9 28.1 54.6 48.2 38.4 42.8 29.8 20.1 40.9 50.0 36.1 28.6 17.7 2.2 36.8 38.4 41.4 36.4 32.9 9.2 37.7 40.1 28.0 29.8 23.2 9.4 31.6 40.4 33.4 27.6 14.7 2.0 31.7 34.4 34.2 29.5 28.7 4.8 31.0 45.8 42.7 41.7 29.8 14.1 40.9 40.4 37.4 33.8 27.4 8.4 35.7 When studied by generation, more under-35s (48%) have the minimum level of schooling than their elders aged 35 to 44 (44%) and especially those aged 45 and over (34%). This configuration reflects the steady development of the education system in the African countries. Yet the schooling dynamic is not the same everywhere. At one end of the scale, there are the cities with a long tradition of schooling. At the other end of the scale are those where the development of schooling has been stepped up more recently. The first group comprises Lomé, Abidjan and Cotonou where, even among the individuals aged 45 to 59, a not-inconsiderable proportion (at least 45%) has the minimum level of schooling. In the second group (Bamako, Niamey and, to a certain extent, Ouagadougou), over 60% of the over-35s do not have the minimum level of schooling. Dakar stands out for its stagnation (at around 60%) in the proportion of individuals without the minimum grounding in education across all generations (15 to 59 years old). A last point worth mentioning about the educational landscape of the major WAEMU cities is the low weight of vocational education, which never exceeds 2% of the over-15s with the notable exception of Mali where it comes to 6%. This is characteristic of an education system in which vocational training is left by the wayside. 13 4.1 Labour market integration of the “products” of the education and training system: unemployment Definition of unemployment The ILO defines as unemployed any person who has not worked in the week preceding the survey and who is actively seeking work. The 1-2-3 Surveys add a second definition to this strict notion of unemployment: a broader concept of unemployment that takes the ILO definition and adds in all those who are not actively seeking a job, but are prepared to work should the opportunity arise. This broader definition of unemployment raises the number of unemployed from 460,500 to 673,000 individuals for all the WAEMU cities together. We feel it better reflects the real situation on the African urban labour markets, which typically have low rates of wage earners (only 36% of employed workers in all the cities considered are salaried employees) and no operational institutions to register job seekers and help them to find a job. A mixed bag of correlations between unemployment and level of education Taking all the WAEMU cities together (Table 4), the unemployment rate is the lowest (14.6%) among those individuals without the minimum level of schooling. It rises to 20%-21% for those with levels ranging from completed primary schooling to completed secondary schooling. It then drops slightly (19%) among those individuals who have completed at least one year of higher education. Lastly, the fact that human capital is thin on the ground does not appear to protect those who have it against unemployment. This is particularly true in Lomé where unemployment increases strictly with the level of education (from 8% for those with no education to 22.5% for those with higher education). The trends are less linear in the other cities. In most cases, unemployment tends first to increase with the level of education, but then decrease with the completion of secondary school and entry into higher education studies. This is particularly the case in Cotonou, Dakar and Ouagadougou where higher education somewhat reduces the extent of unemployment. 14 Table 4. Unemployment rates by level of education (%) Cotonou Primary incomplete or no schooling Primary complete or middle school incomplete Vocational secondary Middle school complete or secondary incomplete Secondary complete Higher education Total Ouaga- Abidja dougou n Bamak o Niame y Dakar Lomé Total 4.4 19.6 12.6 11.1 22.9 18.7 8.5 14.1 7.8 27.3 21.4 16.1 33.1 24.5 11.3 19.9 5.6 23.1 26.4 16.6 20.6 21.2 15.3 20.5 10.4 33.0 20.2 21.0 24.9 21.6 15.3 20.4 22.3 14.2 6.8 34.0 14.2 22.6 19.7 22.8 16.4 6.3 9.2 12.6 14.3 11.0 23.6 22.4 15.0 19.8 22.7 22.4 11.3 21.0 18.5 16.4 The findings of the econometric analysis (Table 5) are similar to those of the descriptive analysis. Other things being equal, individuals without the minimum level of schooling appear to be less exposed to unemployment that those who have at least completed primary school. Lomé shows a strong positive relation between unemployment and education. Cotonou and Abidjan also follow this trend. In the other cities, the link between unemployment and level of education takes the bell shape observed previously. Table 5. Logistic modelling of unemployment probabilities for individuals aged 15 to 59 (all capitals) Relative risk of unemployment (odds ratio) Marginal probability 0.93*** 1.00*** 1.42*** -0.004*** 0.000*** 0.021*** Primary complete or middle incomplete Vocational secondary Middle complete or secondary incomplete Secondary complete General higher education 1.55*** 2.17*** 1.89*** 2.15*** 2.48*** 0.029*** 0.064*** 0.048*** 0.063*** 0.077*** Pseudo R2 Log pseudo-likelihood Overall significance (Wald Chi2(32)) Observations 0.23 -12,328 2,384 37,309 Individual characteristics Age (Age)2 Woman Level of education (Reference = None or primary incomplete) 15 *, ** and *** signify respectively significant coefficient at the 10%, 5% and 1% level. The additional explanatory variables in the model are migratory status, marital status, the household’s per capita income, how the individual is related to the head of household, the household’s dependency ratio, dummy variables for the country, and a dummy variable for an undeclared level of education (not significant). The fact that investment in human capital does not always open the door to employment reflects the state of deterioration on the African urban labour markets. This deterioration is due to the failure (or absence) of urbanisation policies unable, for whatever reason, to set in motion a drive to create skilled jobs. It is also a consequence of the structural adjustment policies whose credo was, among other things, to reduce staff in the civil service. This explanation is all the more plausible in that among the individuals aged 45 to 59, who entered the labour market before the urban boom and before the full force of the structural adjustment plans was felt, higher education is synonymous with a low risk of unemployment across all the countries (Table 6). Table 6. Unemployment rates by level of education among 45-59 year olds Primary incomplete or no schooling Primary complete or middle school incomplete Vocational secondary Middle school complete or secondary incomplete Secondary complete Higher education Total Cotono u Ouagadougou Abidja n Bamak o Niamey Dakar Lomé Total 4.4 12.1 7.7 5.5 13.9 11.5 8.5 9.1 4.1 9.8 12.9 12.6 22.4 19.0 8.4 12.8 3.5 10.1 18.3 4.4 23.7 10.2 16.5 12.1 7.6 12.7 2.1 12.1 27.3 10.1 2.8 7.4 0.0 0.0 4.0 0.0 1.6 11.0 0.0 6.2 8.2 14.5 3.0 6.1 17.8 9.2 15.0 6.9 4.2 11.6 7.7 9.5 8.3 3.4 4.9 9.0 Although being unemployed is an indicator of exclusion from the labour market, having a job does not always guard well against precarity. Before drawing any conclusions about the efficiency of human capital in the labour market integration process, we need to look at its effect on the quality of the job held in addition to its impact on unemployment. 16 4.2 The match between level of education and job: the “qualitative” balance on the urban labour market A quantitative analysis of the balance on the labour market reveals the existence of notinconsiderable unemployment against which human capital accumulation is no shield, especially among young people. An analysis of external efficiency should also consider the correspondence between level of education and job quality. Job quality is studied here in terms of the employment sector: public formal, private formal and informal. Close correspondence between level of education and institutional sector There is a very close link between level of education and employment sector. In all of the cities, virtually all of the employed workers (91%) who had not started or completed primary school worked in the informal sector (Graph 2). Complete primary schooling brings the proportion in the informal sector down to 75% and the fact of having completed middle school further reduces it to 50%. Only 19% of the individuals who had entered higher education worked in the informal sector. Give or take a few fluctuations, this configuration holds for all the cities except Lomé. Although, in the Togolese capital, the formal sector clearly supplants the informal sector as the level of education rises, this trend is slower than in the other cities and a not-inconsiderable proportion (39%) of people with higher education work in the informal sector. However, it is worth noting that this city also displays a phenomenon whereby 95% of individuals who did not start or complete primary school work in the informal sector. Even when controlling for a certain number of factors (age, gender, migratory status, marital status, household’s per capita income, how the individual is related to the head of household, and the household’s dependency ratio), the link between level of education and employment sector barely changes, regardless of the city considered8. These findings derived from a multinomial logit model of sector participation are not presented, but are available on request from the authors. 8 17 Graph 2. Share of workers in the informal sector by education level 1 0.9 0.8 Cotonou 0.7 Ouagadougou 0.6 Abidjan 0.5 Bamako 0.4 Niamey 0.3 Dakar 0.2 Lomé Total 0.1 0 Primary incomplete or no schooling Primary complete or middle incomplete Middle complete or secondary incomplete Vocational secondary Secondary complete Higher edu. Although the level of education plays an important role in access to the modern sector, the type of education also has a not-inconsiderable effect. For example, only 37% of the individuals with vocational training9 work in the informal sectors as opposed to nearly 50% of their counterparts who reached an equivalent level in the secondary system (having completed at least middle school without reaching secondary school). When the cities are taken separately, vocational education is found to be a better instrument for integration into the modern sector than general education in Niamey, Dakar, Bamako, Cotonou and Lomé. Approximately 82% of the Nigerian capital’s workers with vocational training work in the formal sector, as opposed to 71% in Dakar and Bamako, 58% in Cotonou and 50% in Lomé. By way of comparison, the proportion of people who had completed general studies at middle school and worked in the formal sector stood at 68% in Niamey, 55% in Dakar, 41% in Bamako, 44% in Cotonou and 30% in Lomé. However, in Abidjan and Ouagadougou, vocational education shows no advantage over general education in terms of the chances of entering the formal sector. Individuals who completed at least four years of vocational education and who therefore obtained at least the Occupational Proficiency Certificate (CAP). 9 18 4.3 The effect of education on earnings 4.3.1 Intercity earnings vary by level of education and employment sector The average earned income for all the WAEMU cities is 62,000 CFA francs10. There are some substantial differences between cities (Table 7). A worker in Abidjan earns an average 76,000 CFA francs per month whereas a worker in Dakar earns 66,000 CFA francs per month and a worker in Lomé earns a mere 34,000 CFA francs per month. The other cities are in intermediate positions with earned incomes of 48,000 to 57,000 CFA francs. At this aggregate level, there appears to be no clear link between the level of earnings and the level of human capital as measured by education. Table 7. Average income and average number of years of education Cotonou Ouagadougou Abidjan Bamako Niamey Dakar Lomé Total Average earned income per worker (in thousands of CFA francs) 49.2 48.2 76.2 56.9 55.5 65.5 33.9 61.7 Average number of years of education per employed worker 5.9 4.4 5.2 4.1 4.7 4.7 6.0 5.0 Lomé paradoxically posts the lowest earnings and the highest average number of years of education. Conversely, workers are much better paid in Abidjan and Dakar where average levels of education are lower than in Lomé. However, there is a very close link at the individual level between level of education and earned income (Graph 3). For example, across all the cities, incomes range from 38,000 CFA francs for those without the basic level of education (no schooling or primary incomplete) to 122,000 CFA francs for those who completed secondary school. Entry into higher education prompts a huge quantitative leap with earnings virtually doubling (from 122,000 to 228,000 CFA francs). Taken separately, each city follows this same earned income curve: steady growth through to the end of secondary school followed by a surge at higher education level. 10 Income in terms of Purchasing Power Parity (PPP). Dakar’s PPP factor was taken as the reference. 19 Graph 3. Earned incomes by level of education Earned income (in 1000 CFAF) 280 240 200 160 120 Cotonou Ouagadougou 80 Abidjan Bamako 40 Niamey 0 Dakar Primary incomplete or no schooling Primary complete or middle incomplete Middle complete or Secondary incomplete Vocational Secondary Secondary complete Higher edu. Lomé Total Earned income (in 1000 CFAF) Graph 4. Earned income by employment sector and city 250,0 Public sector Formal private sector 200,0 Informal sector 150,0 100,0 50,0 l To ta Lo m é ak ar N ia ak am B D m ey o n ja bi d A ug ou ad o ua g O C ot on ou 0,0 The breakdown by sector also reveals substantial earnings inequalities (Graph 4). For example, public-sector workers earn an average of 145,000 CFA francs per month, which is approximately three and a half times more than informal sector workers who scrape by with just 39,000 CFA francs per month. Formal private sector workers are also winners on the labour market with 112,000 CFA francs per month. This bipolar configuration is found in all the cities studied: high earnings in the public sector, 20 followed closely by the formal private sector (except in Abidjan where private-sector earnings stand apart at 75,000 CFA francs), while the informal sector lags far behind these high yields. 4.3.2 Private returns to education The descriptive analyses above show the huge variability in earned incomes in the major West African cities: variability by city, level of education and employment sector. Yet although these analyses find a close link between investment in education and earnings, it is hard and tricky to deduce the intrinsic efficiency of investment in human capital on the labour markets considered. Isolating this efficiency entails first controlling for a certain number of factors that could simultaneously affect education and productivity or remuneration (migratory status, marital status, religion, job seniority, potential experience, gender and employment sector). Moreover, a notinconsiderable proportion (approximately 40% in all the cities) of the potentially working population aged 15 and over is either out of the labour force or unemployed. Although this decision to not work is not random, any estimate of returns to education not taking into account non-participation is potentially biased. We estimated selectioncorrection models using the method advocated in Section 3 in order to correct this selection bias. In addition, the estimates were made on the log of hourly rather than monthly earnings to take account of the heterogeneity of working hours in different sectors. Lastly, the probable segmentation of the labour market calls for an estimation of models by employment sector. The findings of all these exercises are presented in tables A2 to A12 in the appendix. Marginal returns to education increase in line with years of education The findings confirm one of the facts revealed by the descriptive analyses, that of a nonconstant rate of returns to education in each city. Regardless of the city considered, the quadratic term (level of education squared) is always significant and positive (Table A2 in the appendix and Graph 5a below). This means that education has an accelerator effect on labour market remuneration and hence that the marginal returns increase as human capital is accumulated. This growth is due largely to the surge in earnings observed in the descriptive analyses when individuals make the transition from secondary to higher education. 21 The non-linear nature of the relationship between years of education and remuneration means that it is impossible to estimate a single marginal return. Instead, we have to estimate an average marginal return, i.e. a marginal return corresponding to the average number of years of education. This estimate finds that Ouagadougou has the highest returns to education, at nearly 10%. Next in line are Lomé (8.3%), and Cotonou, Abidjan and Niamey (7.5%). At the bottom of the scale, the average returns in Bamako and Dakar are just 6% and 6.5% respectively. Our estimates also confirm a certain number of findings noted by other papers (Table A2 in the appendix). For example, women in all the cities earn, other things being equal, from 18% (in Niamey) to 46% (in Bamako) less than the men. Likewise, the informal sector pays a lot less11 than the private sector, which pays slightly less than the public sector12 (Tables A7 to A9). We estimated the returns to qualifications to better explain the non-linearity of the link between level of education and remuneration and also to address both the quality and quantity of education. Returns to qualifications Returns to qualifications can be studied in two ways. One way is to directly consider the regression model coefficients (Tables A4 to A6 in the appendix). In this case, the coefficient associated with each qualification is interpreted as the rate of increase in earnings between individuals with no qualifications (the reference in the regressions) and individuals with the qualification considered. Another way is to calculate the marginal returns obtained by subtracting from the considered qualification’s coefficient (qualification d) the value of the coefficient for the qualification immediately below it (qualification d-1). For example, the marginal returns to a baccalauréat plus two years of higher education (Bac+2) are calculated by finding the difference between the coefficient for the Bac+2 and the coefficient for just the baccalauréat alone. For the occupational proficiency certificate (CAP), qualification d-1 is the primary certificate (CEP) and not the middle school certificate (BEPC). The marginal returns hence correspond to the increases in earnings generated by the acquisition of the successive 11 12 The differences between the two sectors range from 23% in Cotonou to 62% in Ouagadougou. With deviations varying from some 4% in Ouagadougou to 20% in Lomé and Cotonou. 22 qualifications. In this paper, we choose to interpret the marginal returns since they measure the additional value of each qualification rather than the value compared with “no qualifications”, which can almost always only ever be positive. Not surprisingly, the effect of each qualification on remuneration is positive overall with a huge quantitative leap for higher education, as already shown by the descriptive analyses. Moreover, vocational education qualifications are often found to be more profitable than general education qualifications when compared with the number of years required to obtain them (Graph 5). For example, although it generally takes one year less to obtain the vocational certificate (BEP) than to obtain the baccalauréat, the BEP is much more profitable than the baccalauréat in all the cities except Abidjan and Niamey. The returns to the BEP are even found to be over 30% higher than the returns to the baccalauréat in Cotonou, Ouagadougou, Bamako and Lomé. Likewise, although it takes the same number of years to study for both the BEPC and the CAP, this occupational proficiency certificate drives hourly wages higher than the BEPC in all the cities except Ouagadougou and Lomé, where it is less profitable. The returns to the CAP are hence over 20% higher than the returns to the BEPC in Cotonou, Niamey and Dakar and approximately 5% higher in the other cities. The two lowest educational qualifications, i.e. the CEP and the BEPC, are two of the most profitable qualifications with marginal returns of 35% each overall and returns varying from 25% in Lomé to 54% in Ouagadougou for the CEP and from 12% in Dakar to 55% in Ouagadougou for the BEPC. The decisive effect of these two basic qualifications, especially the CEP, on the increase in earnings constitutes a weighty argument in favour of the Millennium Development Goal of “primary education for all”. In addition to the most basic level of qualifications, the Bac+2 qualifications obtained from two years of higher education are also highly profitable with marginal rates of around 35% for all the cities and a rate over 60% higher than for the baccalauréat in Lomé. Niamey is the only city where a Bac+2 qualification brings in little (merely 5%). It is striking to see that the baccalauréat, taken at the end of secondary school and directly 23 or indirectly (via a competitive exam) opening the door to university, earns little in virtually all the cities except Abidjan where it brings in as much as Bac+2 qualifications. Graph 5. Marginal returns to qualifications in all employment sectors 0,8 0,6 0,4 0,2 0 Cotonou Ouagadougou Abidjan Bamako Niamey Dakar Lomé Total -0,2 -0,4 Primary certificate (CEP) Middle school certificate (BEPC) Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat (BAC) Qualifications requiring two years of higher education (DEUG/DUT/BTS) Qualifications requiring over two years of higher education Estimation of the returns to qualifications by employment sector The application of a single model to all gainfully employed individuals can only observe the average effect of education on earnings owing to specific effects found in each employment sector. In the case in which these specific effects differ little from one sector to the next (i.e. education acts in the same way in the informal, formal private and public sectors), an overall model suffices to be able to draw conclusions applicable to each of the labour market segments. Where these effects vary a great deal, it is also vital to estimate the returns to education separately for each sector to be able to observe their specific effects. These estimates find highly contrasting configurations (Tables A7 to A12 in the appendix). The explanatory power of the models corrected for the selection bias used in tables A6 to A11 explains on average 50%, 43% and 33.5% respectively of the individual earnings deviations in the public sector, the formal private sector and the informal sector. 24 Graph 6. Marginal returns to qualifications in the public sector 0,8 0,6 0,4 0,2 0 Cotonou Ouagadougou Abidjan Bamako Niamey Dakar Lomé Total -0,2 -0,4 Primary certificate (CEP) Middle school certificate (BEPC) Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat (BAC) Two years of higher education (DEUG/DUT/BTS) Over two years of higher education In the public sector (Graph 6), as in the overall models, the disparities in levels of human capital measured by qualification level are highly significant in the explanation of earnings differentials. Regardless of the city considered, the two middle school qualifications, i.e. the BEPC and the CAP, have a substantial marginal profitability. Yet aside from this constant, the additional profitability of the other qualifications fluctuates from one city to the next. For example, compared with individuals with no qualifications, individuals holding solely the primary certificate (CEP) secure no additional remuneration gain in Lomé, Cotonou and Bamako. Although the absence of profitability in Cotonou and Lomé might be explained by the extensive development of schooling in these cities, the case of Bamako is hard to explain. Contrary to the observation in these three cities, holding the CEP gives a substantial boost (25% to 42%) to the wages of individuals in the public sector in Ouagadougou, Niamey and Dakar. Although the baccalauréat is highly profitable in Abidjan (65%), Bamako (39%) and, to a lesser extent, Lomé (22%), it has a limited if not no effect in Cotonou, Ouagadougou and Dakar. Qualifications from higher education courses lasting more than two years make a substantial marginal contribution to earnings (over 20%) in all the cities except Lomé, 25 where returns are nonexistent compared with the returns to qualifications from twoyear higher education courses (Bac+2). In the formal private sector, human capital measured by qualifications does very little to explain the earnings differences in hardly any of the cities. With the notable exception of Lomé, where qualifications higher than the primary certificate (CEP) generate a gain on the labour market, the analyses (Table A11) show that only higher education qualifications clearly and significantly increase earned income in the other cities. The analyses to date do not provide any clear explanations as to why this might be. One hypothesis, however, could be that unobservable characteristics affect education and income in different ways13. In any case, although these unobservables are at work via the selection factor, this selection factor appears to be negatively correlated with income and the analyses would have to be developed in more depth to find out whether it is correlated positively with the level of education. In the informal sector (Graph 7), contrary to the formal private sector, the returns to education are much more significant. Save in Dakar, where only qualifications from higher education courses lasting more than two years have a significant effect on earnings, the returns to each qualification in the other six cities are significantly positive and increase overall with the qualification level attained compared with individuals with no qualifications. Here, as in the public sector, the marginal profitability of qualifications varies from one city to the next. For example, although the vocational certificate is highly profitable in Ouagadougou, Bamako, Niamey and Lomé, it is not found to be significant for Cotonou and is less profitable than the occupational proficiency certificate (CAP) in Abidjan. In these latter two cities, the baccalauréat generates a substantial gain (of over 40%) compared with the vocational certificate, whereas it is much less profitable in all the other cities. 13 For example, positively with income and negatively with the level of education, or vice versa. 26 Graph 7. Marginal returns to qualifications in the informal sector 0,8 0,6 0,4 0,2 0 Cotono Ouagadoug -0,2 Abidja Bamak Niamey Dakar Lomé Total -0,4 Primary certificate (CEP) Middle school certificate (BEPC) Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat (BAC) Two years of higher education (DEUG/DUT/BTS) Over two years of higher education 5. Conclusion Education appears to be a definite factor for increased earnings on the urban labour markets in West Africa. Although it does not always guard against unemployment, it does open the door for the most well-educated to get into the most profitable niches, which are found in the formal private and public sectors. These findings have already been relatively well covered by other papers on the subject. The major contribution of our study is that we show that educational capital, including at advanced levels, substantially increases the gains in the informal sector in most of the WAEMU cities. This finding has considerable political implications: we are seeing a boom in the number of highly educated young people in the African cities who are not finding work compatible with their skills. The findings of this study suggest that their integration into the informal sector is far from a loss in terms of household and 27 government investment in education. In fact, their intellectual grounding should enable them, doubtless by means of innovation and adaptation, to be more productive than their colleagues with little or no qualifications. This constitutes a weighty argument against the idea that investment in education should concentrate more on primary education to the detriment of the higher levels of education. Given that the informal sector creates over 80% of the jobs in the WAEMU cities (Brilleau et al., 2005), concentrating public employment action in this sector by introducing policies that are really attractive for the most productive workers (i.e. all those with qualifications) would, at least in the short term, provide a serious alternative to the lack of employment observed in the public and formal private sectors. Such a policy, coupled with continued support to primary and post-primary education, could also pay off in the medium to long term by generating the accumulation required for the modern economy to take off in the African cities. 28 APPENDIX Table A1. Overview of certain labour market indicators in the seven capitals (2001-2002) Indicators Cotonou Benin Ouagadougou Burkina Abidjan Côte d’Ivoire 49.6 49.3 70.9% Bamako Mali Niamey Niger Dakar Senegal Lomé Togo Total 78.4 59.4 57.3 67.1 34.9 63.4 58.9% 66.7% 46.3% 57% 59.9% 73.5% 63.1% 6.4% 5.4% 5.6% 7.5% 8.7% 10.2% 30.3% 9.3% 27% 40.2% 29.6% 48.7% 38.2% 35.9% 21.7% 30.2% (% of the female labour force aged 15-59) 83.8% 77.9% 87.0% 67.4% 56.8% 63.3% 88.3% 74.6% - No schooling - Higher education 84.4% 87.1% 73.8% 96.6% 76.4% 94.3% 64.2% 83.7% 55% 91.1% 62% 76.6% 87.9% 91.1% 70.6% 90.0% Proportion of the male labour force in the informal sector 70.0% 74.9% 63.1% 71.0% 67.6% 69.4% 74.7% 68.2% 91.2% 75.6% 19.6% 90.9% 71.6% 20.0% 85.3% 58.7% 23.3% 84.7% 74.6% 17.3% 85.0% 60.9% 18.6% 85.8% 54.4% 19.6% 88.1% 76.0% 39.2% 86.2% 65.1% 22.4% 41.8% 37.3% 34.1% 32.4% 36.3% 33.8% 42.2% 35.2% 20.5% 17.8% 25.5% 21.9% 16.7% 16.4% 22.0% 21.9% 7.3% 2.3% 5.9% 7.5% 1.0% 5.2% 3.6% 5.4% Average monthly income from main job (1,000 CFAF) Literacy Reads and French writes in (% of the adult population aged 20-45) Reads and writes in a national language (% of the adult population aged 20-45) Cannot read or write in any language (% of the adult population aged 20-45) Female participation rate (% of the male labour force aged 15-59) - No schooling - General middle school - Higher education Proportion households of poor (1st quartile of per capita income) - Head of household with no schooling - Head of household with general middle school edu. - Head of household with higher education Source: PARSTAT, 1-2-3 Survey, Phase 1 (2001-2002). 29 Table A2. Estimation of the marginal returns to education from an earnings function (both genders) Dependent variable: log of hourly earnings Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.052*** (6.11) 0.002*** 0.080*** (8.78) 0.002*** 0.012 (1.50) 0.006*** 0.028** (2.42) 0.004*** 0.047*** (4.88) 0.003*** 0.047*** (5.61) 0.002*** 0.023** (2.18) 0.005*** 0.032*** (8.19) 0.004*** (3.95) (4.57) (11.10) (4.49) (5.64) (4.35) (6.67) (15.93) Potential experience 0.004 0.031*** 0.020*** 0.041*** 0.017*** 0.025*** 0.018*** 0.019*** (age – years of education – 6) (0.67) (5.01) (3.81) (6.35) (2.70) (4.26) (2.82) (7.29) Completed years of education (Completed years of education)2 (Potential experience)2/100 Seniority in current job (Seniority in current job) 2/100 Woman Public sector Formal private sector (8) 0.010 -0.029*** -0.010 -0.046*** -0.013 -0.023*** -0.013 -0.013*** (0.98) (3.17) (1.20) (4.93) (1.57) (2.71) (1.22) (3.26) 0.026*** 0.031*** 0.029*** 0.030*** 0.032*** 0.025*** 0.034*** 0.029*** (4.31) (5.06) (4.79) (4.73) (5.73) (4.80) (5.77) (11.69) -0.049** -0.047** -0.066*** -0.051*** -0.051*** -0.039*** -0.063*** -0.055*** (2.44) (2.29) (3.31) (2.72) (3.09) (2.62) (3.21) (7.26) -0.436*** -0.354*** -0.359*** -0.456*** -0.179*** -0.285*** -0.314*** -0.436*** (12.98) (9.96) (11.24) (11.22) (4.11) (7.92) (8.82) (12.98) 0.402*** 0.664*** 0.648*** 0.326*** 0.446*** 0.494*** 0.628*** 0.402*** (7.39) (13.59) (12.81) (5.28) (10.16) (10.73) (11.17) (7.39) 0.232*** 0.621*** 0.469*** 0.237*** 0.404*** 0.403*** 0.438*** 0.232*** (4.99) (12.77) (13.54) (4.28) (8.19) (10.60) (7.59) (4.99) -0.416*** (7.75) -2.112*** (17.25) -0.329*** (6.64) -2.962*** (26.40) -0.313*** (6.99) -2.086*** (22.01) -0.002 (0.04) -2.086*** (22.01) -0.272*** (5.33) -2.563*** (21.77) -0.246*** (4.59) -2.434*** (19.76) -0.325*** (5.00) -2.799*** (23.47) -0.333*** (14.22) -2.083*** (39.08) 4182 0.43 3663 0.56 4011 0.49 4011 0.36 3817 0.44 3068 0.39 3491 0.37 26561 0.47 Selection correction Inverse Mills ratio Constant Observations R-squared Note: The additional explanatory variables in the models are migratory status, marital status and two dummy variables for religion. Fixed country effects have been added to the model for column (8). The inverse Mills ratio is derived from a probit estimation of labour market participation for each country (with, as dependent variable, a dummy variable of strictly positive income) comprising age and age squared, gender, years of education, migratory status, marital status, religion and three identifying variables in the form of the household’s per capita income, how the individual is related to the head of household and the dependency ratio. The Student statistics are given in brackets. The standard deviations are corrected using White’s method. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. The reference category is a man (Nigerian in Model (8)) employed in the informal sector. Table A3. Estimation of the marginal returns to education by level of education based on an earnings function (both genders) Dependent variable: log of hourly earnings Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.072*** 0.079*** 0.038*** 0.043*** 0.039*** 0.065*** 0.050*** 0.052*** (8.79) (9.54) (4.92) (3.94) (4.27) (9.24) (5.66) (14.70) 0.041*** 0.147*** 0.106*** 0.082*** 0.144*** 0.065*** 0.083*** 0.090*** (3.02) (9.35) (6.90) (3.15) (7.52) (4.35) (5.91) (12.99) 0.168*** 0.180*** 0.194*** 0.170*** 0.153*** 0.110*** 0.192*** 0.175*** (6.60) (6.80) (7.52) (3.72) (5.50) (4.35) (6.90) (14.10) 0.245*** 0.192*** 0.145*** 0.136*** 0.166*** 0.117*** 0.160*** (8.23) 0.102*** (8.07) 0.102*** (5.90) 0.157*** (6.33) 0.081** (8.13) 0.086*** (3.90) 0.131*** (5.70) 0.135*** 0.130*** (11.71) (5.84) (5.62) (8.39) (2.30) (4.95) (6.77) (4.74) (13.64) Potential experience 0.003 0.033*** 0.020*** 0.041*** 0.017*** 0.025*** 0.018*** 0.003 (age – years of education – 6) (0.45) (5.29) (3.78) (6.29) (2.80) (4.22) (2.77) (0.45) 0.012 -0.032*** -0.011 -0.046*** -0.015* -0.022*** -0.012 0.012 (1.18) (3.44) (1.23) (4.84) (1.70) (2.63) (1.18) (1.18) 0.026*** 0.031*** 0.029*** 0.030*** 0.031*** 0.025*** 0.034*** 0.026*** (4.25) (5.08) (4.83) (4.72) (5.56) (4.76) (5.74) (4.25) -0.049** -0.048** -0.066*** -0.051*** -0.050*** -0.038** -0.062*** -0.049** (2.43) (2.32) (3.30) (2.74) (2.99) (2.57) (3.16) (2.43) -0.433*** -0.368*** -0.364*** -0.459*** -0.194*** -0.283*** (12.95) 0.388*** (10.29) 0.645*** (11.38) 0.641*** (11.19) 0.301*** (4.43) 0.409*** (7.89) 0.495*** -0.317*** (8.92) -0.433*** (12.95) 0.616*** 0.388*** (7.34) (13.13) (12.55) (4.92) (9.33) (10.75) (11.11) (7.34) 0.213*** 0.602*** 0.467*** 0.224*** 0.383*** 0.404*** 0.423*** 0.213*** (4.51) (12.29) (13.44) (4.01) (7.80) (10.58) (7.36) (4.51) -0.396*** -0.288*** -0.276*** 0.009 -0.251*** -0.240*** -0.286*** -0.300*** Years in primary education Years in general middle school Years in general secondary school Years in vocational education Years in higher education (Potential experience)2/100 Seniority in current job (Seniority in current job) 2/100 Woman Public sector Formal private sector Selection correction Inverse Mills ratio (8) 0.126*** 31 (7.29) -2.097*** (17.08) 4183 0.43 Constant Observations R-squared (5.81) -2.963*** (26.54) 3663 0.56 (6.19) -2.080*** (21.51) 4011 0.51 (0.17) (4.86) (4.46) (4.40) (12.84) -2.549*** (21.73) 3817 0.36 -2.391*** (19.45) 3068 0.45 -2.158*** (17.72) 4354 0.39 -2.800*** (23.37) -2.802*** (54.51) 3493 0.38 26589 0.48 Note: The additional explanatory variables in the models are migratory status, marital status and two dummy variables for religion. Fixed country effects have been added to the model for column (8). The inverse Mills ratio is derived from a probit estimation of labour market participation for each country (with, as dependent variable, a dummy variable of strictly positive income) comprising age and age squared, gender, years of education, migratory status, marital status, religion and three identifying variables in the form of the household’s per capita income, how the individual is related to the head of household and the dependency ratio. The Student statistics are given in brackets. The standard deviations are corrected using White’s method. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. The reference category is a man (Nigerian in Model (8)) employed in the informal sector. Table A4. Estimation of the returns to qualifications based on an earnings function (both genders) Dependent variable: log of hourly earnings CEP (primary certificate) BEPC (middle school certificate) Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat DEUG/DUT/BTS (Two years of higher education) Qualification obtained after more than two years of higher education Other qualifications Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) 0.325*** (8.68) 0.592*** (11.80) 0.863*** (9.95) 1.291*** (7.09) 1.035*** (12.50) 1.286*** (9.31) 1.310*** (17.46) 1.183*** (7.20) 0.550*** (12.50) 1.076*** (17.46) 0.973*** (10.58) 1.425*** (12.18) 1.456*** (17.60) 1.725*** (14.71) 1.933*** (21.59) 1.501*** (12.55) 0.292*** (7.94) 0.658*** (12.18) 0.705*** (5.30) 0.729*** (7.13) 1.056*** (13.23) 1.378*** (17.66) 1.657*** (20.75) 1.336*** (10.91) 0.381*** (6.22) 0.636*** (7.68) 0.681*** (7.44) 0.999*** (12.74) 0.848*** (4.71) 1.055*** (9.98) 1.340*** (15.20) 1.178*** (4.71) 0.401*** (7.98) 0.716*** (9.08) 1.039*** (10.13) 1.005*** (10.63) 1.155*** (11.12) 1.208*** (9.71) 1.491*** (21.81) 1.367*** (14.24) 0.370*** (8.56) 0.497*** (8.18) 0.728*** (5.97) 0.814*** (5.92) 0.765*** (10.77) 0.986*** (8.55) 1.222*** (13.82) 1.330*** (12.90) 0.241*** (6.20) 0.636*** (10.91) 0.555*** (3.74) 0.967*** (7.37) 0.943*** (9.24) 1.523*** (8.72) 1.610*** (16.02) 1.199*** (7.99) Total (8) 0.332*** (17.93) 0.666*** (25.50) 0.713*** (12.82) 0.857*** (17.93) 1.019*** (24.31) 1.350*** (25.80) 1.527*** (37.34) 1.301*** (22.10) 32 Potential experience (Potential experience)2/100 Seniority in current job (Seniority in job) 2/100 Woman Public sector Formal private sector Selection correction Inverse Mills ratio Constant Observations R-squared -0.001 (0.23) 0.014 (1.42) 0.027*** (4.52) -0.053*** (2.62) -0.486*** (14.89) 0.398*** (7.13) 0.227*** (4.78) 0.024*** (3.99) -0.024*** (2.59) 0.032*** (5.26) -0.050** (2.42) -0.380*** (10.57) 0.658*** (13.19) 0.606*** (12.26) 0.013** (2.47) -0.004 (0.44) 0.031*** (5.16) -0.070*** (3.47) -0.392*** (12.25) 0.674*** (12.78) 0.494*** (14.10) 0.040*** (6.22) -0.046*** (4.88) 0.029*** (4.65) -0.050*** (2.67) -0.473*** (11.48) 0.328*** (5.16) 0.235*** (4.15) 0.008 (1.39) -0.006 (0.77) 0.032*** (5.86) -0.052*** (3.16) -0.194*** (4.37) 0.435*** (9.87) 0.404*** (8.19) 0.013** (2.21) -0.012 (1.44) 0.026*** (4.89) -0.036** (2.44) -0.308*** (8.48) 0.531*** (11.67) 0.444*** (11.37) 0.011* (1.74) -0.008 (0.75) 0.037*** (6.22) -0.068*** (3.50) -0.349*** (9.91) 0.651*** (11.89) 0.458*** (8.03) 0.012*** (4.54) -0.007* (1.68) 0.031*** (12.41) -0.058*** (7.64) -0.358*** (22.40) 0.573*** (25.70) 0.439*** (22.16) -0.420*** (7.71) -1.834*** (15.69) 4182 0.42 -0.298*** (5.98) -2.723*** (25.92) 3663 0.56 -0.281*** (6.28) -1.885*** (20.57) 4011 0.50 0.018 (0.34) -2.480*** (21.84) 3817 0.36 -0.266*** (5.09) -2.149*** (19.03) 3068 0.45 -0.272*** (5.00) -1.770*** (14.62) 4329 0.38 -0.311*** (4.92) -2.527*** (22.56) 3491 0.38 -0.314*** (13.40) -2.128*** (42.73) 26561 0.47 Note: The additional explanatory variables in the models are migratory status, marital status and two dummy variables for religion. Fixed country effects have been added to the model for column (8). The inverse Mills ratio is derived from a probit estimation of labour market participation for each country (with, as dependent variable, a dummy variable of strictly positive income) comprising age and age squared, gender, qualifications obtained, migratory status, marital status, religion and three identifying variables in the form of the household’s per capita income, how the individual is related to the head of household and the dependency ratio. The Student statistics are given in brackets. The standard deviations are corrected using White’s method. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. The reference category is a man (Nigerian in Model (8)) with no qualifications employed in the informal sector. Table A5. Estimation of the returns to qualifications based on an earnings function for men Dependent variable: log of hourly earnings CEP (primary certificate) BEPC (middle school certificate) Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.323*** (6.47) 0.618*** (9.70) 0.526*** (10.68) 0.996*** (14.00) 0.280*** (5.86) 0.611*** (9.22) 0.460*** (5.61) 0.799*** (7.37) 0.379*** (6.14) 0.740*** (8.19) 0.356*** (6.74) 0.612*** (8.52) 0.193*** (3.30) 0.668*** (9.44) 0.326*** (13.73) 0.686*** (21.37) (8) 33 Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat DEUG/DUT/BTS (Two years of higher education) Qualification obtained after more than two years of higher education Other qualifications Potential experience (Potential experience)2/100 Seniority in current job (Seniority in job) 2/100 Public sector Formal private sector Selection correction Inverse Mills ratio Constant Observations R-squared 0.938*** (10.67) 1.440*** (5.50) 1.044*** (11.53) 1.408*** (8.31) 1.366*** (15.94) 1.347*** (7.70) -0.008 (0.88) 0.038** (2.48) 0.029*** (3.25) -0.044 (1.43) 0.204*** (3.16) 0.064 (1.14) 1.071*** (9.12) 1.235*** (8.48) 1.444*** (15.21) 1.744*** (12.55) 1.866*** (18.09) 1.453*** (11.46) 0.020** (2.44) -0.011 (0.88) 0.028*** (3.85) -0.041* (1.70) 0.475*** (9.61) 0.424*** (8.17) 0.792*** (4.41) 0.809*** (5.71) 1.044*** (11.25) 1.296*** (13.57) 1.619*** (17.60) 1.421*** (9.84) 0.014* (1.85) 0.005 (0.40) 0.024*** (3.15) -0.049** (2.05) 0.572*** (9.28) 0.385*** (9.61) 0.631*** (4.84) 0.925*** (10.42) 0.977*** (4.54) 1.064*** (8.15) 1.333*** (14.27) 1.407*** (6.83) 0.014 (1.50) 0.002 (0.16) 0.030*** (3.88) -0.061*** (2.77) 0.242*** (3.26) 0.207*** (3.42) 1.018*** (6.95) 0.970*** (7.23) 1.086*** (9.52) 1.191*** (8.25) 1.490*** (18.69) 1.433*** (12.35) -0.007 (0.92) 0.021** (1.98) 0.026*** (3.80) -0.047** (2.30) 0.370*** (7.55) 0.367*** (6.78) 0.774*** (6.68) 0.837*** (3.88) 0.811*** (10.17) 1.096*** (8.69) 1.260*** (14.00) 1.553*** (13.61) -0.019** (2.34) 0.048*** (3.78) 0.025*** (3.74) -0.038** (2.11) 0.459*** (8.89) 0.360*** (8.31) 0.714*** (3.66) 0.913*** (6.45) 0.888*** (7.35) 1.338*** (7.18) 1.610*** (14.63) 1.207*** (7.01) 0.006 (0.65) 0.012 (0.78) 0.032*** (3.83) -0.066** (2.34) 0.489*** (7.69) 0.323*** (5.12) 0.771*** (9.89) 0.886*** (15.13) 1.035*** (21.48) 1.314*** (22.54) 1.519*** (33.51) 1.420*** (21.57) 0.002 (0.43) 0.019*** (3.50) 0.028*** (8.85) -0.053*** (5.61) 0.438*** (17.08) 0.328*** (14.76) -0.579*** (7.70) -1.733*** (11.43) 2064 0.39 -0.680*** (9.49) -2.527*** (19.24) 2135 0.54 -0.412*** (5.88) -1.887*** (15.47) 2244 0.46 -0.575*** (6.05) -2.096*** (13.04) 2129 0.34 -0.479*** (6.13) -1.870*** (13.28) 1941 0.45 -0.811*** (9.85) -1.264*** (8.22) 2448 0.40 -0.446*** (5.55) -2.351*** (15.34) 1687 0.34 -0.613*** (16.65) -2.412*** (37.59) 14648 0.44 Note: The additional explanatory variables in the models are migratory status, marital status and two dummy variables for religion. Fixed country effects have been added to the model for column (8). The inverse Mills ratio is derived from a probit estimation of labour market participation for each country (with, as dependent variable, a dummy variable of strictly positive income) comprising age and age squared, gender, qualifications obtained, migratory status, marital status, religion and three identifying variables in the form of the household’s per capita income, how the individual is related to the head of household and the dependency ratio. The Student statistics are given in brackets. The standard deviations are corrected using White’s method. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. The reference category is a man (Togolese in Model (8)) with no qualifications employed in the informal sector. 34 Table A6. Estimation of the returns to qualifications based on an earnings function for women Dependent variable: log of hourly earnings CEP (primary certificate) BEPC (middle school certificate) Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat DEUG/DUT/BTS (Two years of higher education) Qualification obtained after more than two years of higher education Other qualifications Potential experience (Potential experience)2/100 Seniority in current job (Seniority in job) 2/100 Public sector Formal private sector Selection correction Inverse Mills ratio Constant Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.322*** (5.73) 0.465*** (5.64) 0.625*** (3.56) 0.943*** (5.20) 1.021*** (6.04) 0.845*** (6.38) 1.279*** (9.45) 0.811*** (2.89) 0.007 (0.81) -0.007 (0.55) 0.027*** (3.77) -0.068*** (3.18) 0.820*** (8.37) 0.658*** (8.42) 0.574*** (7.21) 1.215*** (10.39) 0.925*** (6.58) 1.597*** (9.14) 1.531*** (10.78) 1.687*** (9.94) 2.190*** (13.46) 1.666*** (7.07) 0.025*** (2.82) -0.029** (2.19) 0.037*** (3.28) -0.087** (2.03) 0.995*** (9.14) 0.936*** (8.49) 0.271*** (4.65) 0.766*** (8.55) 0.485*** (3.10) 0.552*** (3.73) 1.040*** (7.14) 1.335*** (10.20) 1.846*** (12.31) 1.191*** (4.94) 0.008 (1.02) -0.003 (0.23) 0.044*** (4.38) -0.110*** (3.06) 0.846*** (8.52) 0.756*** (10.35) 0.335*** (3.61) 0.477*** (3.30) 0.763*** (5.37) 1.168*** (8.26) 1.323*** (3.50) 1.193*** (5.90) 1.562*** (6.10) 0.395 (0.49) 0.064*** (7.23) -0.087*** (6.77) 0.029*** (2.67) -0.066* (1.69) 0.561*** (4.74) 0.289** (2.37) 0.519*** (5.63) 0.795*** (5.08) 1.245*** (7.28) 1.235*** (8.83) 1.685*** (7.05) 1.303*** (6.03) 1.719*** (12.11) 1.417*** (7.96) 0.039*** (4.00) -0.050*** (3.66) 0.038*** (4.24) -0.066** (2.37) 0.558*** (5.45) 0.465*** (4.13) 0.456*** (6.13) 0.429*** (4.03) 0.897*** (3.82) 0.789*** (4.22) 0.778*** (5.38) 0.911*** (4.00) 1.321*** (5.41) 1.002*** (4.89) 0.027*** (3.30) -0.038*** (3.24) 0.026*** (3.12) -0.038 (1.55) 0.668*** (7.17) 0.587*** (6.78) 0.268*** (5.04) 0.474*** (4.22) 0.201 (0.97) 0.802*** (3.13) 1.102*** (6.47) 2.264*** (10.89) 1.712*** (6.08) 1.398*** (6.94) 0.014* (1.65) -0.020 (1.53) 0.038*** (4.61) -0.065** (2.42) 1.113*** (11.85) 0.822*** (6.64) 0.329*** (11.26) 0.616*** (13.69) 0.584*** (8.42) 0.771*** (9.89) 1.056*** (13.55) 1.360*** (14.36) 1.692*** (19.05) 1.081*** (8.61) 0.020*** (5.19) -0.025*** (4.43) 0.036*** (9.10) -0.077*** (6.25) 0.863*** (19.97) 0.697*** (16.55) -0.224*** (2.92) -2.582*** (15.15) 0.056 (0.83) -3.436*** (21.25) -0.184*** (3.11) -2.259*** (17.28) 0.397*** (5.72) -3.378*** (23.32) 0.086 (1.11) -3.157*** (15.14) 0.036 (0.51) -2.474*** (12.98) -0.197** (2.18) -3.049*** (19.10) -0.060* (1.84) -2.884*** (39.39) (8) 35 Observations R-squared 2118 0.29 1528 0.55 1767 0.44 1688 0.32 1127 0.41 1881 0.28 1804 0.27 11913 0.39 Note: The additional explanatory variables in the models are migratory status, marital status and two dummy variables for religion. Fixed country effects have been added to the model for column (8). The inverse Mills ratio is derived from a probit estimation of labour market participation for each country (with, as dependent variable, a dummy variable of strictly positive income) comprising age and age squared, gender, qualifications obtained, migratory status, marital status, religion and three identifying variables in the form of the household’s per capita income, how the individual is related to the head of household and the dependency ratio. The Student statistics are given in brackets. The standard deviations are corrected using White’s method. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. The reference category is a woman (Beninese in Model (8)) with no qualifications employed in the informal sector. 36 Table A7. Estimation of the marginal returns to education in the public sector (both genders) Dependent variable: log of hourly earnings Total completed years of education Potential experience (Potential experience)2/100 Woman Selection correction Inverse Mills ratio Constant Observations R-squared Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.122*** (15.89) 0.029** (2.26) 0.005 (0.19) -0.002 (0.03) 0.111*** (18.25) 0.046*** (5.06) -0.041** (2.52) 0.038 (0.67) 0.122*** (13.41) 0.011 (0.70) 0.034 (1.02) 0.094 (1.15) 0.093*** (13.56) 0.046*** (4.08) -0.051** (2.51) -0.062 (0.85) 0.104*** (16.28) 0.045*** (5.14) -0.051*** (3.55) 0.105 (1.36) 0.088*** (12.75) 0.016 (1.45) 0.009 (0.47) -0.049 (0.69) 0.138*** (12.78) 0.008 (0.45) 0.030 (0.89) 0.231** (2.23) 0.108*** (39.89) 0.036*** (8.52) -0.026*** (3.40) 0.051* (1.75) 0.025 (0.32) -2.648*** (11.18) 410 0.48 0.174*** (3.19) -2.871*** (18.16) 594 0.55 0.342*** (5.48) -2.565*** (10.45) 306 0.51 0.038 (0.69) -2.619*** (12.95) 459 0.40 0.220*** (3.75) -2.913*** (17.04) 597 0.48 0.296*** (4.20) -2.156*** (11.52) 477 0.42 0.250** (2.29) -3.111*** (9.85) 310 0.46 0.193*** (7.35) -2.268*** (25.80) 3153 0.50 (8) The Student statistics are given in brackets. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. Table A7b) Estimation of the marginal returns to education in the public sector (both genders) Dependent variable: log of hourly earnings Years in primary education Years in general middle school Years in general secondary school Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.046 0.089*** 0.132*** 0.058** 0.040** 0.082*** 0.082* 0.078*** (1.33) (5.15) (3.05) (2.16) (2.08) (3.72) (1.89) (8.54) 0.088*** 0.128*** 0.099** 0.083** 0.141*** 0.049** 0.077** 0.088*** (2.85) (6.21) (2.40) (2.08) (5.20) (2.11) (2.13) (8.26) 0.180*** 0.130*** 0.158*** 0.145*** 0.144*** 0.130*** 0.258*** 0.158*** (8) 37 Years in vocational education Years in higher education Potential experience (Potential experience)2/100 Woman (4.98) (4.84) (3.82) (3.01) (4.59) (4.19) (5.92) (12.05) 0.246*** 0.154*** 0.058 0.098*** 0.153*** 0.113*** 0.165*** 0.127*** (4.12) (4.93) (1.14) (4.10) (5.90) (3.33) (3.83) (10.98) 0.131*** 0.106*** 0.111*** 0.095*** 0.100*** 0.102*** 0.118*** 0.111*** (6.90) (6.25) (4.94) (3.03) (5.68) (4.98) (4.11) (14.14) 0.037*** 0.046*** 0.011 0.054*** 0.051*** 0.019 0.023 0.041*** (2.84) (4.70) (0.63) (4.55) (5.60) (1.59) (1.17) (9.28) -0.013 -0.042** 0.035 -0.068*** -0.064*** 0.003 -0.002 -0.038*** (0.51) (2.35) (0.95) (3.13) (4.23) (0.16) (0.04) -0.030 (0.39) 0.026 (0.44) 0.116 (1.39) -0.037 (0.50) 0.079 (1.01) -0.034 (0.48) 0.232** (2.25) (4.67) 0.049* -0.056 0.181*** 0.355*** 0.023 (0.68) (3.09) (5.36) (0.41) 0.201*** (3.28) 0.298*** (4.06) 0.169 (1.50) 0.172*** (6.32) -2.162*** -2.832*** -2.590*** -2.514*** -2.751*** -2.119*** -2.798*** -2.134*** (7.59) (17.11) (8.79) (11.92) (15.41) (10.48) (7.78) (23.06) (1.69) Selection correction Inverse Mills ratio Constant Observations R-squared 411 594 306 459 597 483 312 3162 0.49 0.55 0.52 0.41 0.50 0.43 0.48 0.51 Note: The additional explanatory variables in the models are migratory status, marital status and two dummy variables for religion. Fixed country effects have been added to the model for column (8). The inverse Mills ratio is derived from an estimation of a multinomial logit model of sector choices for each country (with the reference category being individuals with zero earnings) comprising age and age squared, gender, years of education, migratory status, marital status, religion and three identifying variables in the form of the household’s per capita income, how the individual is related to the head of household and the dependency ratio. The model is estimated using Lee’s method (1983) and the procedure advocated by Bourguignon, Martin and Gurgand (2004). The Student statistics are given in brackets. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. 38 Table A8. Estimation of the marginal returns to education in the formal private sector (both genders) Dependent variable: log of hourly earnings Completed years of education Potential experience (Potential experience)2/100 Woman Selection correction Inverse Mills ratio Constant Observations R-squared Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.066*** (5.57) -0.010 (0.85) 0.060*** (3.00) 0.021 (0.30) 0.032 (1.62) -0.020 (1.20) 0.056** (2.20) 0.025 (0.29) 0.064*** (4.80) -0.015 (1.18) 0.060*** (2.80) -0.058 (0.88) 0.045*** (3.10) -0.011 (0.61) 0.049* (1.81) -0.124 (0.98) 0.068*** (3.11) -0.003 (0.17) 0.043 (1.48) -0.121 (1.11) 0.026** (2.40) -0.019* (1.76) 0.050*** (3.08) -0.043 (0.70) 0.137*** (8.68) 0.024 (1.22) 0.008 (0.22) 0.161 (1.25) 0.025*** (3.70) -0.031*** (5.09) 0.080*** (8.37) 0.016 (0.51) -0.334*** (4.46) -0.929** (2.49) 529 0.39 -0.813*** (5.26) 0.038 (0.07) 346 0.52 -0.471*** (5.67) -0.216 (0.53) 854 0.44 -0.403*** (5.03) -0.847* (1.83) 454 0.36 -0.616*** (3.43) -0.913 (1.44) 414 0.49 -0.634*** (7.49) 0.228 (0.64) 946 0.36 -0.066 (1.02) -3.036*** (6.97) 305 0.37 -0.791*** (14.67) -0.120 (0.55) 3848 0.42 (8) The Student statistics are given in brackets. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. Table A8b) Estimation of the marginal returns to education in the formal private sector (both genders) Dependent variable: log of hourly earnings Years in primary education Years in general middle school Years in general secondary school Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total -0.019 -0.013 -0.003 -0.005 0.035 -0.008 0.062 -0.004 (0.67) (0.49) (0.17) (0.16) (1.12) (0.47) (1.26) (0.41) 0.067** -0.128*** 0.025 0.072 0.068 -0.028 0.076 -0.032** (2.14) (3.05) (0.84) (1.29) (1.29) (1.18) (1.62) (2.20) 0.062 0.166*** 0.141*** 0.114 0.125** 0.046 0.184*** 0.084*** (8) 39 (1.51) (2.99) (3.58) (1.27) (1.98) (1.40) (2.81) (4.52) 0.172*** 0.097** 0.099*** -0.015 -0.011 -0.043 0.169*** -0.006 (3.32) (2.23) (2.87) (0.32) (0.16) (0.87) (2.72) (0.31) 0.133*** 0.118*** 0.183*** 0.082 0.070* 0.105*** 0.219*** 0.105*** (5.97) (3.16) (6.64) (1.19) (1.78) (4.47) (4.69) (8.55) -0.006 -0.033** 0.001 -0.014 0.001 -0.023** 0.024 -0.027*** (0.50) (1.99) (0.09) (0.77) (0.05) (2.13) (1.25) (4.42) 0.046** 0.069*** 0.026 0.052* 0.032 0.056*** 0.000 0.071*** (2.38) (2.75) (1.24) (1.95) (1.06) (3.33) (0.01) (7.35) 0.002 0.090 -0.073 -0.024 -0.093 -0.017 0.112 0.034 (0.03) (1.05) (1.14) (0.19) (0.82) (0.29) (0.86) (1.06) -0.281*** -0.940*** -0.389*** -0.417*** -0.603*** -0.732*** -0.063 -0.776*** (4.90) (6.24) (4.88) (5.40) (3.21) (8.39) (0.97) (14.66) -0.702** 0.773 -0.268 -0.635 -0.829 0.685* -2.607*** 0.015 (2.07) (1.32) (0.68) (1.40) (1.25) (1.87) (5.62) (0.07) Observations 529 346 854 454 414 957 305 3859 R-squared 0.41 0.57 0.48 0.38 0.49 0.38 0.39 0.44 Years in vocational education Years in higher education Potential experience (Potential experience)2/100 Woman Selection correction Inverse Mills ratio Constant Note: The additional explanatory variables in the models are migratory status, marital status and two dummy variables for religion. Fixed country effects have been added to the model for column (8). The inverse Mills ratio is derived from an estimation of a multinomial logit model of sector choices for each country (with the reference category being individuals with zero earnings) comprising age and age squared, gender, years of education, migratory status, marital status, religion and three identifying variables in the form of the household’s per capita income, how the individual is related to the head of household and the dependency ratio. The model is estimated using Lee’s method (1983) and the procedure advocated by Bourguignon, Martin and Gurgand (2004). The Student statistics are given in brackets. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. 40 Table A9. Estimation of the marginal returns to education in the informal sector (both genders) Dependent variable: log of hourly earnings Completed years of education Potential experience (Potential experience)2/100 Woman Selection correction Inverse Mills ratio Constant Observations R-squared Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.036*** (7.00) -0.001 (0.22) 0.017** (2.19) -0.468*** (13.88) 0.102*** (18.04) 0.045*** (8.08) -0.042*** (5.50) -0.516*** (13.54) 0.047*** (9.13) 0.002 (0.42) 0.020** (2.36) -0.281*** (6.80) 0.050*** (9.43) 0.029*** (5.15) -0.022*** (2.76) -0.395*** (8.76) 0.071*** (11.53) 0.028*** (4.79) -0.015** (2.08) -0.315*** (6.98) -0.002 (0.32) -0.023*** (3.53) 0.044*** (4.86) 0.145*** (3.19) 0.067*** (12.49) 0.031*** (6.02) -0.029*** (3.74) -0.399*** (10.09) -0.007*** (2.80) -0.043*** (17.35) 0.079*** (22.53) 0.098*** (5.46) -0.389*** (10.73) -0.990*** (6.59) 3249 0.28 -0.109*** (6.22) -2.852*** (23.56) 2770 0.30 -0.365*** (11.51) -1.142*** (8.73) 2859 0.27 -0.245*** (6.66) -1.773*** (13.04) 2928 0.23 -0.129*** (4.79) -2.350*** (16.97) 2232 0.17 -1.072*** (16.21) 0.700*** (3.26) 3404 0.25 -0.114*** (6.06) -2.678*** (22.09) 2930 0.21 -1.187*** (48.61) 0.860*** (10.47) 20372 0.33 (8) The Student statistics are given in brackets. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. Table A9b) Estimation of the marginal returns to education in the informal sector (both genders) Dependent variable: log of hourly earnings Years in primary education Years in general middle school Years in general secondary school Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.043*** 0.057*** 0.006 0.033*** 0.023** -0.018** 0.028*** -0.032*** (5.66) (6.38) (0.64) (3.45) (2.15) (2.01) (3.07) (9.13) 0.017 0.128*** 0.077*** 0.068** 0.103*** -0.008 0.081*** -0.001 (1.10) (6.09) (3.76) (2.57) (3.85) (0.43) (5.36) (0.11) 0.154*** 0.214*** 0.124*** 0.052 0.153*** 0.064 0.144*** 0.060*** (8) 41 (4.51) (4.09) (2.79) (0.74) (2.63) (1.61) (4.20) (3.80) 0.106** 0.229*** 0.103*** 0.131*** 0.154** -0.033 0.137*** 0.019 (2.01) (4.63) (2.65) (3.95) (2.47) (0.54) (3.10) (1.15) 0.088** 0.187*** 0.178*** 0.118 0.118** 0.061 0.132*** 0.089*** (2.55) (3.77) (3.49) (1.57) (2.21) (1.29) (3.63) (5.38) 0.008 0.042*** 0.006 0.030*** 0.020*** -0.023*** 0.032*** -0.043*** (1.56) (7.55) (1.04) (5.46) (3.42) (3.65) (6.25) (17.60) 0.002 -0.040*** 0.013 -0.024*** -0.006 0.044*** -0.033*** 0.078*** (0.32) (5.23) (1.57) (3.07) (0.85) (4.94) (4.33) (22.49) -0.513*** -0.511*** -0.301*** -0.398*** -0.260*** 0.153*** -0.412*** 0.105*** (15.50) (13.44) (7.41) (8.82) (5.60) (3.36) (10.45) (5.85) -0.252*** -0.124*** -0.346*** -0.231*** -0.213*** -1.075*** -0.119*** -1.195*** (8.75) (6.70) (11.44) (6.45) (6.34) (16.35) (6.21) (48.80) -1.416*** -2.687*** -1.119*** -1.801*** -1.975*** 0.750*** -2.548*** 0.954*** (10.76) (21.72) (8.70) (13.56) (13.03) (3.50) (20.76) (11.58) Observations 3249 2770 2859 2928 2232 3413 2930 20381 R-squared 0.27 0.31 0.28 0.23 0.19 0.25 0.22 0.33 Years in vocational education Years in higher education Potential experience (Potential experience)2/100 Woman Selection correction Inverse Mills ratio Constant Note: The additional explanatory variables in the models are migratory status, marital status and two dummy variables for religion. Fixed country effects have been added to the model for column (8). The inverse Mills ratio is derived from an estimation of a multinomial logit model of sector choices for each country (with the reference category being individuals with zero earnings) comprising age and age squared, gender, years of education, migratory status, marital status, religion and three identifying variables in the form of the household’s per capita income, how the individual is related to the head of household and the dependency ratio. The model is estimated using Lee’s method (1983) and the procedure advocated by Bourguignon, Martin and Gurgand (2004). The Student statistics are given in brackets. *, ** and *** indicate respectively that the coefficient is significant at the 10%, 5% and 1% level. 42 Table A10. Estimation of the returns to qualifications in the public sector (both genders) Dependent variable: log of hourly earnings CEP (primary certificate) BEPC (middle school certificate) Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat DEUG/DUT/BTS (two years of higher education) Qualification obtained after more than two years of higher education Other qualifications Potential experience (Potential experience)2/100 Woman Selection correction Inverse Mills ratio Constant Observations R-squared Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.147 (1.13) 0.590*** (4.63) 0.733*** (3.95) 1.295*** (3.50) 0.912*** (6.06) 1.311*** (6.70) 1.521*** (11.61) 1.433*** (9.22) 0.040*** (2.99) -0.025 (0.98) -0.045 (0.58) 0.423*** (4.98) 0.916*** (11.14) 0.761*** (6.16) 1.231*** (7.69) 1.345*** (11.56) 1.414*** (11.55) 1.730*** (17.38) 1.404*** (11.26) 0.046*** (4.76) -0.048*** (2.70) -0.000 (0.01) 0.319* (1.71) 0.734*** (4.03) 0.894*** (3.67) 0.362 (1.32) 1.025*** (5.13) 1.217*** (5.81) 1.494*** (8.39) 1.130*** (5.60) 0.009 (0.49) 0.025 (0.67) 0.025 (0.28) 0.173 (1.51) 0.577*** (4.25) 0.604*** (5.13) 0.773*** (7.39) 1.158*** (5.82) 0.845*** (6.74) 1.267*** (11.55) 1.095*** (6.96) 0.058*** (4.95) -0.082*** (3.89) -0.046 (0.60) 0.348*** (3.89) 0.623*** (6.17) 0.975*** (7.47) 0.900*** (7.31) 1.078*** (8.36) 1.046*** (5.37) 1.407*** (14.79) 1.214*** (10.87) 0.041*** (4.49) -0.059*** (3.91) 0.068 (0.84) 0.332*** (3.56) 0.561*** (6.34) 0.970*** (5.65) 0.824*** (5.23) 0.850*** (7.75) 0.895*** (5.18) 1.234*** (11.83) 1.281*** (11.26) 0.014 (1.24) 0.002 (0.08) -0.105 (1.47) 0.138 (1.00) 0.664*** (4.56) 0.765*** (3.22) 0.763*** (3.59) 1.015*** (5.73) 1.607*** (6.40) 1.574*** (9.57) 1.472*** (7.03) 0.018 (0.92) -0.008 (0.22) 0.257** (2.45) 0.275*** (6.73) 0.669*** (16.40) 0.800*** (14.09) 0.900*** (16.18) 1.036*** (19.92) 1.157*** (19.29) 1.469*** (34.15) 1.293*** (24.60) 0.039*** (8.90) -0.045*** (5.63) 0.014 (0.46) -0.048 (0.58) -1.906*** (7.75) 410 0.48 0.171*** (2.92) -2.599*** (16.31) 594 0.55 0.314*** (4.44) -1.895*** (6.90) 306 0.47 0.044 (0.76) -2.336*** (11.51) 459 0.40 0.231*** (3.72) -2.426*** (13.96) 597 0.48 0.272*** (3.78) -1.695*** (9.74) 477 0.45 0.197* (1.73) -2.254*** (7.43) 310 0.47 0.170*** (6.14) -1.796*** (20.28) 3153 0.49 (8) 43 Table A11. Estimation of the returns to qualifications in the formal private sector (both genders) Dependent variable: log of hourly earnings CEP (primary certificate) BEPC (middle school certificate) Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat DEUG/DUT/BTS (two years of higher education) Qualification obtained after more than two years of higher education Other qualifications Potential experience (Potential experience)2/100 Woman Selection correction Inverse Mills ratio Constant Observations R-squared Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.056 (0.52) 0.190 (1.38) 0.477*** (2.94) 0.591 (1.47) 0.430** (2.52) 0.330* (1.65) 0.820*** (4.72) 0.754*** (4.01) -0.015 (1.32) 0.059*** (3.00) 0.022 (0.32) -0.193 (1.38) -0.565** (2.32) -0.184 (0.83) 0.048 (0.18) -0.087 (0.31) 0.012 (0.04) 0.507* (1.74) 0.015 (0.05) -0.034** (2.11) 0.069*** (2.73) 0.126 (1.46) -0.074 (0.84) -0.088 (0.62) -0.071 (0.35) 0.291* (1.79) 0.252 (1.36) 0.590*** (3.33) 0.872*** (4.59) 0.622*** (2.71) -0.016 (1.35) 0.048** (2.27) -0.078 (1.22) 0.032 (0.22) 0.144 (0.71) 0.006 (0.03) 0.027 (0.13) 0.209 (0.54) 0.669** (2.43) 0.749*** (3.41) 1.126** (2.38) -0.024 (1.30) 0.066** (2.42) 0.001 (0.01) 0.093 (0.57) -0.014 (0.05) 0.140 (0.33) -0.141 (0.40) 0.814** (2.45) 0.436 (1.34) 0.761** (2.38) 0.768** (2.38) -0.012 (0.62) 0.042 (1.39) -0.009 (0.09) -0.116 (1.42) -0.194* (1.76) -0.159 (0.81) -0.269 (1.12) -0.109 (0.79) 0.086 (0.46) 0.316** (2.23) 0.638*** (3.54) -0.030*** (3.03) 0.061*** (3.91) -0.031 (0.51) 0.035 (0.23) 0.470*** (2.68) 0.825*** (2.96) 0.670** (2.28) 0.889*** (3.55) 1.997*** (6.19) 1.498*** (6.58) 1.630*** (3.95) 0.025 (1.26) -0.011 (0.31) 0.019 (0.15) -0.175*** (3.83) -0.318*** (4.44) -0.240*** (2.64) -0.320*** (3.24) -0.084 (0.94) 0.117 (1.16) 0.274*** (2.89) 0.277*** (2.62) -0.039*** (6.67) 0.084*** (8.95) 0.047 (1.48) -0.389*** (5.43) -0.331 (0.99) 529 0.42 -0.956*** (6.45) 0.836 (1.53) 346 0.56 -0.522*** (6.41) 0.404 (1.10) 854 0.48 -0.477*** (5.98) -0.324 (0.74) 454 0.39 -0.756*** (4.08) -0.140 (0.23) 414 0.51 -0.724*** (9.30) 0.815*** (2.74) 946 0.38 -0.071 (1.05) -2.214*** (5.45) 305 0.39 -0.881*** (16.94) 0.520*** (2.67) 3848 0.44 (8) 44 Table A12. Estimation of the returns to qualifications in the informal sector (both genders) Dependent variable: log of hourly earnings CEP (primary certificate) BEPC (middle school certificate) Occupational proficiency certificate (CAP) Vocational certificate (BEP) Baccalauréat DEUG/DUT/BTS (two years of higher education) Qualification obtained after more than two years of higher education Other qualifications Potential experience (Potential experience)2/100 Woman Selection correction Inverse Mills ratio Constant Observations R-squared Cotonou (Benin) (1) Ouagadougou (Burkina Faso) (2) Abidjan (Côte d’Ivoire) (3) Bamako (Mali) (4) Niamey (Niger) (5) Dakar (Senegal) (6) Lomé (Togo) (7) Total 0.119*** (3.09) 0.250*** (4.12) 0.290** (2.42) 0.288 (0.63) 0.585*** (4.57) 1.002*** (4.58) 0.723*** (5.26) 0.673*** (3.11) -0.005 (0.95) 0.020** (2.49) -0.496*** (14.66) 0.425*** (8.54) 0.942*** (10.76) 0.962*** (5.75) 1.326*** (5.30) 1.318*** (6.95) 1.808*** (7.21) 2.157*** (13.02) 1.206*** (2.82) 0.034*** (6.24) -0.031*** (4.11) -0.516*** (13.55) 0.102** (2.27) 0.359*** (4.34) 0.453*** (2.78) 0.363** (2.08) 0.838*** (6.30) 0.650*** (4.03) 1.221*** (8.93) 0.645** (2.22) -0.004 (0.67) 0.026*** (3.03) -0.254*** (6.05) 0.333*** (6.53) 0.460*** (4.49) 0.337** (2.26) 0.949*** (7.19) 0.520** (2.51) 0.549** (2.31) 1.080*** (6.15) 0.175 (0.43) 0.027*** (4.91) -0.020** (2.55) -0.367*** (7.94) 0.329*** (5.29) 0.609*** (4.50) 0.426 (1.35) 1.025*** (3.45) 0.849*** (4.27) 1.501*** (4.76) 1.530*** (9.68) 1.114*** (3.93) 0.019*** (3.34) -0.007 (0.95) -0.303*** (6.69) 0.022 (0.46) -0.104 (1.32) -0.081 (0.34) -0.274 (0.96) 0.132 (1.02) 0.496 (1.17) 0.308** (1.98) 0.312 (1.46) -0.028*** (4.75) 0.049*** (5.84) 0.171*** (3.80) 0.181*** (4.42) 0.517*** (8.27) 0.174 (0.99) 1.024*** (4.89) 0.607*** (4.38) 0.877*** (3.54) 1.623*** (11.88) 0.898*** (4.39) 0.026*** (5.13) -0.028*** (3.65) -0.422*** (10.80) -0.093*** (5.10) -0.073** (2.37) -0.194*** (3.09) 0.031 (0.40) 0.150*** (2.65) 0.035 (0.39) 0.473*** (8.20) 0.164* (1.71) -0.045*** (19.31) 0.081*** (23.97) 0.112*** (6.28) -0.399*** (11.27) -0.802*** (5.79) 3249 0.27 -0.144*** (7.45) -2.427*** (21.03) 2770 0.31 -0.420*** (12.84) -0.853*** (6.90) 2859 0.28 -0.281*** (7.37) -1.640*** (12.50) 2928 0.23 -0.151*** (5.35) -2.005*** (15.61) 2232 0.18 -1.095*** (18.11) 0.795*** (4.45) 3404 0.25 -0.138*** (7.10) -2.325*** (20.78) 2930 0.23 -1.197*** (51.06) 0.907*** (12.31) 20372 0.34 (8) 45 References Adams J. 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