Education and its Effect on Earnings in Ghana

Abstract

This thesis focuses on the effect of education on an individual‟s earnings in Ghana. The Mincer (1974) earnings equation is used in examining the relationship between different educational levels and their effect on earnings in Ghana. The study found that there are positive returns to education in Ghana and as such the earnings of an individual rise as a result of additional years of schooling. The findings of the study was confirmed by a cited research by Palmer (2006), noting that returns to education are lowest at the primary level and that it is at the post-basic level that returns are highest. Thus, the old middle school or JSS level has only marginal impact on returns to investment in education. Moreover, the empirical results on gender dimension show some disparity between earnings of males and females in Ghana. It was observed from the descriptive statistics that the mean monthly earnings of males are higher than that of females at the secondary and tertiary levels of education in Ghana. However, the private rate of returns obtained from the earnings equation showed a reverse situation where the private rates of return for females are higher than that of males at the primary and secondary levels of education. This was due to the fact that the supply of educated females is scarce as compared with males on the labour market. This finding was confirmed by Schultz (1996), using estimates for Ghana which shows that returns for females at the secondary level is almost as twice as high as males. Furthermore, on sectoral analysis it was observed that the marginal returns to working in the non-agricultural sector are higher than working in the agricultural sector in Ghana.