Education and inequality in South Africa: Returns to schooling in the post-apartheid era

Abstract

This paper utilizes a new data set to calculate both the private and social returns to schooling in South Africa. More specifically, it examines whether the returns for African and colored South Africans have improved since the initial 1990s post-apartheid era. During that time period, the returns for Africans and coloreds were higher than in previous decades, but the overall compensation structure still heavily favored whites. As of 2008, the inter-racial relationship between returns remained, with remuneration outcomes for Africans and coloreds continuing to lag behind white South Africans by more than 20 percent. Moreover, a large portion of the earnings differential—between 34 and 42 percent—was due to the labor market's lower valuation of African and colored workers’ productive characteristics. Overall, returns in the South African labor market are consistent with recent evidence on the pattern of returns in the developing world today, namely that returns for women are higher than for men and that returns to tertiary schooling are highest.