Estimating the economic return to education in Ghana: a gender-based perspective

Abstract

PurposeThe increasing rate at which individuals, especially, females in Ghana are seeking higher education calls for an estimation of the returns to schooling and education in Ghana.Design/methodology/approachThe study employs the Mincer equation to a representative cross-sectional micro-data from Ghana using OLS and instrumental variable (IV) methodologies. The paper uses spouse's education as instruments in the IV estimation.FindingsReturn to schooling was found to be higher for females than males, likewise, membership of an old student associations and location of the household. Returns to education increases as the level of education rises whilst the rate of returns initially increases but fall as labour market experience rises. The study also found that the rates of return to education were higher for Christian, followed by Muslim and believers of other lesser-known religion in Ghana.Research limitations/implicationsReturn to schooling was found to be higher for females than males. Likewise, individuals who are members of an old student association and are in urban areas were found to have a higher return to schooling than individuals who are not members of an old student association and are in rural areas. Returns to education increases as the level of education rises whilst the rate of returns initially increases but fall as labour market experience rises. The study also found that the rates of return to education were higher for Christian, followed by Muslim and believers of other lesser-known religion in Ghana.Practical implicationsWage determination process is different for males and females, across religion and residency. The higher returns to schooling for females imply education is a good investment for women and girls and should be a development priority.Social implicationsThe higher returns to schooling for females imply an investment in girl's education should be a development priority.Originality/valueThe paper extends the existing literature by focussing on the role of religion, old student's association (alma mater) and gender on the differential earning returns to schooling.