Title:
|
Social returns to education in the Republic of Mauritius
|
This is the first attempt to estimate social returns, by which is meant
pre-tax wage gains, to education in the Republic of Mauritius. Social
returns are estimated for both sexes, by gender, by private and public
sectors, and by rural and urban areas. This study uses cross sectional
data from a sample of the 2000 Population Census. Although
Psacharopoulos along with other researchers have estimated returns to
education for many countries, the Republic of Mauritius had not so far
been included due to lack of data prior to 2000.
The Mincerian approach is used to estimate social returns for the
Republic of Mauritius, using the Ordinary Least Squares (OLS)
method. All wage equations are adjusted for selectivity bias. Findings
are similar to those reported in the literature. First, there is evidence of
diminishing marginal returns to education when the social return to a
year of education is estimated. Second, when highest academic
qualifications are considered, tertiary education yields the highest
social return relative to no schooling at all or to primary schooling
only. Third, social returns to academic and vocational qualifications
are higher for women than for men, a finding consistent with those
reported for other countries and attributed to women's lower foregone
earnings. Fourth, social returns to high level academic qualifications
(' A' level and above) and vocational qualifications are higher in the
private sector than in the public sector. Fifth, social returns are higher
for those who reside in urban areas. Sixth, selectivity bias is minimal
in most cases.
This study also uses the instrumental variable (IV) approach to deal
with the omitted variable bias, endogeneity of schooling and
measurement error. The 1976 free secondary education law is used as
an instrument. This instrument only predicts the schooling of women
for the Republic of Mauritius. IV estimates are consistently higher
than OLS estimates. Implications of these results are discussed.
|