EDUCATIONAL ATTAINMENT AND EARNINGS INEQUALITY IN SOUTH AFRICA

Abstract

This study empirically examines the impact of education on earnings in South Africa, using the five-wave panel of the National Income Dynamics Study (NIDS). An instrumental variable estimation approach using parental education was utilised. The findings of this study suggest that schooling generally has a significantly positive effect on South Africa's earnings outcomes. The evidence also suggests that returns to education are highest at the tertiary level, followed by primary and secondary education. However, the impact of education differs along gender and race lines, implying the existence of inequality. The observed higher returns at higher levels of education suggest the need for equitable access to higher education across socio-economic groups. The key policy recommendation arising from these findings is that the expansion of higher education, particularly for Africans, should be geared towards significantly contributing to the reduction or eradication of the high levels of inequality in South Africa.