Impact of education and health on poverty reduction: Monetary and non-monetary evidence from Fiji

Fiji signed the United Nations 2015 target of halving extreme poverty from its 1990 level, but like many developing countries it is facing challenges in meeting this goal. This paper presents the economic modelling using Fiji's Household Income and Expenditure Survey 2002/03 dataset to examine the economic and social factors crucial for poverty reduction. Two hypotheses are tested: first, we estimate the monetary effects of education at the aggregate and disaggregated returns to education (primary, secondary, tertiary levels) and by income quartiles, and second, test the non-monetary education and health factors as channels of impact promulgated as effects against poverty prevalence. The monetary results indicate that all income quartile households (i.e. lowest to highest) benefit from additional skills obtained through formal education. While those at the lowest income quartile in particular benefit the most from formal education, however it cannot sustainably prevent people with only primary education from falling into poverty. The results for non-monetary models show that education has a positive and significant influence on the tendency of the people to engage in health prevention activities and in acquiring good housing facilities.