Document Type
Working Paper
Publication Date
Spring 2018
Keywords
returns to schooling, subjective returns, perceptions, developing countries, labor markets, Africa
Abstract
Evidence on educational returns and the factors that determine the demand for schooling in developing countries is extremely scarce. Building on previous studies that show individuals underestimating the returns to schooling, we use two surveys from Tanzania to estimate both the actual and perceived schooling returns and subsequently examine what factors drive individual misperceptions regarding actual returns. Using ordinary least squares and instrumental variable methods, we find that each additional year of schooling in Tanzania increases earnings, on average, by 9 to 11 percent. We find that on average individuals underestimate returns to schooling by 74 to 79 percent and three factors are associated with these misperceptions: income, asset poverty and educational attainment. Shedding light on what factors relate to individual beliefs about educational returns can inform policy on how to structure effective interventions in order to correct individual misperceptions.
Recommended Citation
Nikolov, Plamen and N. Jimi. 2018. "What Factors Drive Individual Misperceptions of the Returns to Schooling in Tanzania? Some Lessons for Education Policy" Binghamton University ORB Working Paper, Economics Series 2018. Mimeo.
Included in
African Studies Commons, Cognition and Perception Commons, Development Studies Commons, Early Childhood Education Commons, Economic Policy Commons, Education Economics Commons, Education Policy Commons, Elementary Education Commons, Growth and Development Commons, International and Comparative Education Commons, Labor Economics Commons, Other Economics Commons, Other International and Area Studies Commons, Other Social and Behavioral Sciences Commons, Regional Economics Commons, Secondary Education Commons