The effect of schooling on worker productivity: Evidence from a South African industry panel

Stellenbosch Working Paper Series No. WP04/2014
 
Publication date: 2014
 
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
[protected email address] (Centre for Studies of African Economics, University of Oxford)
 
Abstract:

Schooling is typically found to be highly correlated with individual earnings in African countries. However, African firm or sector level studies have failed to identify a similarly strong effect for average worker schooling levels on productivity. This has been interpreted as evidence that schooling does not increase productivity levels, but may also indicate that the schooling effect cannot be identified when using a schooling measure with limited variation. Using a novel South African industry-level dataset that spans a longer period than typical firm-level panels, this paper identifies a large and significant schooling effect. This result is highly robust across different estimators that allow for correlated industry effects, measurement error, heterogeneous production technologies and cross-sectional dependence.

 
JEL Classification:

J24, D24, C23

Keywords:

Returns to schooling, human capital, labour demand, panel data econometrics, South Africa

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BER Weekly

21 January
Domestically, markets were focused on the latest meeting of the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) last week. On the global front, the news flow was dominated by British political chaos associated with the Brexit debacle. Besides a brief overview of the MPC decision, the domestic section looks at the latest retail sales data,...

Read the full issue