INTRODUCTION 9 Table 1.1 Continued Employment
Explanatory variable Age
Age squared Male Province × urban/rural (1) Log monthly wage (2) (3) (4) (5) (6)
0.0481 0.0469 0.0489 0.7971 0.0812 0.0907 (11.33) (10.98) (11.25) (10.44) (12.28) (12.83) –0.0004
–0.0004 (9.49) –0.0005 (8.90) –0.0007 (15.16) –0.0008 (15.70) (7.75) (7.58) (7.70) (7.89) (9.59) (10.14)
0.1087 0.1073 0.1045 0.4839 0.5019 0.4844 (9.10)
(18.14)
Number of observations 42,688 42,688 R2
Yes Yes Yes Yes Yes Yes 42,688 15,551
15,551 15,551 0.1921 0.2056 0.2189 0.3933 0.4520 0.4601
Source: Republic of South Africa, Statistics South Africa (2003). Notes: Numbers in parentheses are absolute t-values, using robust standard errors with sample stratum clusters (province including both urban and rural areas). The employment indica- tor equals one if an individual worked in some capacity and zero otherwise. The employ- ment indicator equals one if an individual worked in some capacity and zero otherwise. Those who did not look for work within the seven days preceding the survey because they were students or housewives (homemakers) or were retired (preferred not to seek work), ill, disabled, too young, or too old were dropped from the sample. The indicator has a value of one if the individual was guaranteed work in the near future. Data for college graduates and postgraduates were converted into years 16 and 18, respectively.
questions. First, what creates differences in the returns to schooling? One important missing factor is the quality of education, which may substantially differ across schools, possibly correlated with historical backgrounds and local school and community conditions. This issue is examined in depth in Chapters 2 and 3.
Second, why do returns to schooling show convexity? Investments in school- ing below the high school level do not help individuals find jobs, nor does increasing wages in the labor market. Yamauchi (2005a) shows similar findings from the Philippines. This issue is not directly addressed in this monograph.
Approach: School System and Household Behavior The approach taken in this monograph is twofold. First, we try to understand institutional factors that constrain the formation of human capital. In this respect, the school system is the most important factor within the context of South Africa, where the regime transformed from segregation under apart- heid to democracy in the mid-1990s. Unless we understand which institutional and historical factors determine the constraints imposed on microeconomic behavior in human capital investment, it is difficult to correctly interpret findings from household-level analysis.
–0.0009
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