Private Returns to Education in Urban Cameroon

Abstract

Earlier studies on the impact of education on earnings highlighted a declining pattern of the private returns in developing countries. However, recent research has argued that failing to account for the segmented structure of the labour market could be misleading. This study aims to estimate private returns to education in Cameroon, focusing on how they vary across the different segments of the Cameroon labour market. The data used in this study are drawn from the 2005 Employment and Informal Sector Survey, which is nationally representative and comprehensive survey providing information over 8,540 households and 38,599 individuals around the country. The estimation of wage equations corrected from selectivity bias reveals that there are convex rates of return to education in all the segments of the labour market. As far as the private sector is concerned, it is found that those who graduated from primary school earn no returns compared to those who never attended school. The fact that only degrees are rewarded on the Cameroon labour market evidences the existence of a sheepskin effect in Cameroon and may serve as a confirmation of the signalling role of education in this context.