Education, Employment and Earnings of Secondary School and University Leavers in Tanzania: Evidence from a Tracer Study

The empirical evidence on the earnings of educated groups in Tanzania is limited. This study uses a recently completed tracer survey of secondary school completers to analyse the impact of educational qualifications on labour market earnings. Our findings suggest that the rates of return to the highest educational qualifications for wage employees are not negligible and, at the margin, provide an investment incentive. However, we find little evidence of human capital effects in the earnings determination process for the self-employment sector. Information contained in the tracer survey allowed the introduction of controls for father’s educational background and a set of school fixed effects designed to proxy for school quality and potential labour market network effects. Our analysis reveals that the inclusion of these controls in the earnings determination process is important and tends to reduce the estimated rates of return to educational qualifications. A comparison of our results with the available evidence from other countries in the region suggest that despite an extremely small secondary and university education system the private rates of return to education in the Tanzanian wage employment sector are comparatively low.