Educational expansion and shifting private returns to education: Evidence from Mozambique

Abstract

We examine how returns to education have evolved in the context of post-conflict reconstruction and economic growth in Mozambique over the period 1996–2015. We show that private rates of return to education have declined at lower levels of schooling, but remained stable and possibly even increased at the highest levels. Returns are increasingly convex in non-agricultural jobs but almost flat in agriculture. Using consumption expenditure data, as opposed to income data, allows estimation of returns for the entire labour market, not just the minority in formal sector jobs. Results are robust to a wide range of specifications, including use of a pseudo-panel.