Estimating the rate of return to education in Sudan

Samia S. O. M. Nour

#2011-033

This paper examines the rate of return to education in Sudan. One advantage and interesting element in our analysis in this paper is that we explain three stylised facts on the rate of return to education using new primary data in Sudan: first, positive but low rate of return to education and correlations between education, experience, its square and wages for men and women defined by gender, second, positive and significant rate of return to education and correlations between education, experience, its square and wages defined by firm size and industry at the micro level across industrial firms and third, an increase in skill levels and firm size leads to improved relationship between actual education, required education, experience, its square and wages at the micro level across industrial firms. Our paper is relevant and consistent with the recent growing interest in the literature that confirms the importance of investment in education and rate of return to education. Different from the Sudanese literature that estimates the return to human capital at the macro level, we investigate the rate of return to education using new primary data at the micro level. A novel element of our analysis is that we use new primary survey data at the micro level obtained from the university survey (2009) and the firm survey (2010), we present a new contribution and fill the gap in the Sudanese literature by estimating first the rate of return to education for men and women and explaining differences defined by gender and second for industrial firms and explaining differences defined by firm size and industry, since these issues are not adequately discussed in the Sudanese literature. Our findings indicate the importance of investment in education to facilitate enhancing educational attainment and improvement of the rate of return to education in Sudan.

Keywords: Education, returns to education, gender, industry, Sudan.

JEL classification: J01, J16, J21, J24, J31, I21