Measuring Returns to Education and Decomposition of Rural-Urban Inequality: Evidence from Senegal

Type Working Paper
Title Measuring Returns to Education and Decomposition of Rural-Urban Inequality: Evidence from Senegal
Author(s)
Publication (Day/Month/Year) 2013
URL http://www.ecineq.org/ecineq_bari13/FILESxBari13/CR2/p111.pdf
Abstract
In this study, recently developed techniques for unconditional quantile regression are employed to measure both changes in the return to education across quantiles and rural-urban inequality decomposition in consumption expenditure. These methods make use of the Re-centered Influence Function (RIF) to evaluate the impact of changes in the distribution of covariates on the quantiles of the marginal distribution of the outcome variable. The RIF-regression provides a detailed decomposition of quantiles in the same way as means can be decomposed when using the conventional Oaxaca-Blinder method. This study also implements a Bayesian RIF-logit estimation method. These approaches are applied in a linear Mincer equation type to a nationally representative household survey, the Senegal Poverty Monitoring Report (ESPS, 2005). Results primarily suggest that the rate of change in the return to primary education across quantiles are comparatively lower than those to secondary and tertiary educations. Results also suggest that the returns to education are not significant for lower quantiles in rural sectors. Finally, the high rural-urban inequality found in Senegal is attributed in particular to the difference in returns to various covariates. In contrast to the case of Vietnam, the difference in characteristics weakly contributes to the rural-urban inequality.

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