What Explains Wage Differentials for Urban Wage Earners? Returns to Education for Ethiopia’s Urban Wage Employed
The Ethiopian labor market is facing the dual challenge of creating new employment opportunities for the rapidly expanding labor force and improving the quality of existing jobs in the labor market. This paper estimates an earnings function for the...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/722931639413892502/What-Explains-Wage-Differentials-for-Urban-Wage-Earners-Returns-to-Education-for-Ethiopia-s-Urban-Wage-Employed http://hdl.handle.net/10986/36737 |
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okr-10986-367372021-12-17T05:10:56Z What Explains Wage Differentials for Urban Wage Earners? Returns to Education for Ethiopia’s Urban Wage Employed Nath, Shanjukta Wieser, Christina RETURNS TO EDUCATION HUMAN CAPITAL WAGE DIFFERENTIAL URBAN WAGE URBAN EMPLOYMENT LABOR MARKET The Ethiopian labor market is facing the dual challenge of creating new employment opportunities for the rapidly expanding labor force and improving the quality of existing jobs in the labor market. This paper estimates an earnings function for the urban wage-employed to understand how investment in human capital shapes labor market outcomes and to what extent human capital returns have been realized. The key findings show that there are significant gains associated with acquiring higher levels of education in the urban labor market. Interestingly, the analysis also finds that the margin of completed primary compared to incomplete primary education is critical in explaining earning gains. This finding has important implications for education policies in Ethiopia, a country in which about 5 percent of gross domestic product is invested in education annually, with nearly half of the budget earmarked for tertiary-level education. Understanding the returns from various levels of education, in different sectors, regions, as well as gender gaps in earnings is critical for thinking about public investment choices and labor market policies that can support nudging market inclusiveness, equity, and efficiency. Investments by the government aimed at incentivizing completion of primary education can go a long way in ensuing higher wages and improving standards of living in Ethiopia. 2021-12-16T16:13:36Z 2021-12-16T16:13:36Z 2021-12 Working Paper http://documents.worldbank.org/curated/undefined/722931639413892502/What-Explains-Wage-Differentials-for-Urban-Wage-Earners-Returns-to-Education-for-Ethiopia-s-Urban-Wage-Employed http://hdl.handle.net/10986/36737 English Policy Research Working Paper;No. 9879 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Africa Eastern and Southern (AFE) Ethiopia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
RETURNS TO EDUCATION HUMAN CAPITAL WAGE DIFFERENTIAL URBAN WAGE URBAN EMPLOYMENT LABOR MARKET |
| spellingShingle |
RETURNS TO EDUCATION HUMAN CAPITAL WAGE DIFFERENTIAL URBAN WAGE URBAN EMPLOYMENT LABOR MARKET Nath, Shanjukta Wieser, Christina What Explains Wage Differentials for Urban Wage Earners? Returns to Education for Ethiopia’s Urban Wage Employed |
| geographic_facet |
Africa Africa Eastern and Southern (AFE) Ethiopia |
| relation |
Policy Research Working Paper;No. 9879 |
| description |
The Ethiopian labor market is facing
the dual challenge of creating new employment opportunities
for the rapidly expanding labor force and improving the
quality of existing jobs in the labor market. This paper
estimates an earnings function for the urban wage-employed
to understand how investment in human capital shapes labor
market outcomes and to what extent human capital returns
have been realized. The key findings show that there are
significant gains associated with acquiring higher levels of
education in the urban labor market. Interestingly, the
analysis also finds that the margin of completed primary
compared to incomplete primary education is critical in
explaining earning gains. This finding has important
implications for education policies in Ethiopia, a country
in which about 5 percent of gross domestic product is
invested in education annually, with nearly half of the
budget earmarked for tertiary-level education. Understanding
the returns from various levels of education, in different
sectors, regions, as well as gender gaps in earnings is
critical for thinking about public investment choices and
labor market policies that can support nudging market
inclusiveness, equity, and efficiency. Investments by the
government aimed at incentivizing completion of primary
education can go a long way in ensuing higher wages and
improving standards of living in Ethiopia. |
| format |
Working Paper |
| author |
Nath, Shanjukta Wieser, Christina |
| author_facet |
Nath, Shanjukta Wieser, Christina |
| author_sort |
Nath, Shanjukta |
| title |
What Explains Wage Differentials for Urban Wage Earners? Returns to Education for Ethiopia’s Urban Wage Employed |
| title_short |
What Explains Wage Differentials for Urban Wage Earners? Returns to Education for Ethiopia’s Urban Wage Employed |
| title_full |
What Explains Wage Differentials for Urban Wage Earners? Returns to Education for Ethiopia’s Urban Wage Employed |
| title_fullStr |
What Explains Wage Differentials for Urban Wage Earners? Returns to Education for Ethiopia’s Urban Wage Employed |
| title_full_unstemmed |
What Explains Wage Differentials for Urban Wage Earners? Returns to Education for Ethiopia’s Urban Wage Employed |
| title_sort |
what explains wage differentials for urban wage earners? returns to education for ethiopia’s urban wage employed |
| publisher |
World Bank, Washington, DC |
| publishDate |
2021 |
| url |
http://documents.worldbank.org/curated/undefined/722931639413892502/What-Explains-Wage-Differentials-for-Urban-Wage-Earners-Returns-to-Education-for-Ethiopia-s-Urban-Wage-Employed http://hdl.handle.net/10986/36737 |
| _version_ |
1764485801190621184 |