What’s the value of a degree? Evidence from Egypt, Jordan and Tunisia

ABSTRACT

The Middle East and North Africa region has the world’s lowest returns to education. This paper examines what the value of a degree is using nationally representative labour market surveys from Egypt (2012), Jordan (2010) and Tunisia (2014). Specifically, the authors estimate Mincer models for levels and years of schooling. They find that returns are highest in Tunisia and lowest in Egypt, although all three countries fall short of the global average. Higher education is where returns are greatest. They also analyse the returns by sub-groups: sex; age group; and sector. The returns are higher for women than men in Egypt. The younger generation has lower returns than the older generation in Egypt. The private sector in Egypt and Tunisia has lower returns than the public sector. One reason for the low returns is that many individuals are overeducated relative to position requirements.

KEYWORDS:

• Returns to education
• Middle East and North Africa
• labour markets
• wages
• education policy

Acknowledgments

This work was supported by St. Catherine University under the Summer Scholars programme. We are grateful for the helpful comments of the Economics Summer 2016 Brown Bag seminar participants and participants at the Population Association of America 2017 Annual Conference. We thank Kristine West and Caitlyn Keo for their comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Although authors sometimes add additional controls to the model, doing so precludes comparable estimates (Montenegro and Patrinos 2014). The Mincerian model is intentionally parsimonious in order to avoid over-correcting for factors that are correlated with education (e.g. occupation).

2. See Assaad and Krafft (2013) for more information on the ELMPS 2012. See Assaad (2014b) for further details on the JLMPS 2010. See Assaad et al. (2016) for information about the TLMPS 2014.

3. All are publicly available from ERF at http://www.erfdataportal.com/index.php/catalog.

4. In our sample of ages 20–54, among men the probability of being a wage worker rises moderately with education, from 61% for those with no education to 75% for university graduates in Egypt, from 49% to 73% in Jordan, and fluctuates in Tunisia, from 52% to 45% from none to university graduates. For women, there is a much stronger education gradient, from 3% of women being wage workers if they have no education to 42% if university graduates in Egypt, from 5% to 47% in Jordan, and 6% to 37% in Tunisia.

5. For example, to compare the returns to secondary education across the public and private sectors in Tunisia, first, the coefficient on secondary of 0.395 means that a private sector worker with a secondary education earns 39.5% more than a private sector worker who has no education. Second, the coefficient on the public sector of 0.018 means that a worker who has no education earns 1.8% more in the public than the private sector. Third, the interaction of 0.465 for secondary and public means that a secondary educated worker in the public sector earns 46.5% more (a higher return) on top of the secondary and public effects. The coefficients can be added; a secondary educated worker in the public sector earns 87.8% more (0.395 + 0.018 + 0.465 = 0.878) than a private sector worker with no education.

6. However, comparisons of education reporting across ELMPS waves show at least good consistency for the classifications we use (Assaad, Krafft, and Yassin 2018).

Additional information

Funding

This work was supported by the St. Catherine University Summer Scholars programme.