Returns to Education in South Africa: Evidence from the Machibisa Township

We develop a model where blacks in the private sector earn no returns to education if there are relatively too few educated blacks. Using a sample of black females in the late apartheid KwaZulu to control for labour market specific effects, we find that more than a fifth of labour market participants are self-employed. There are no returns to primary education and positive returns for the first two years of secondary education. Further education allows females to find employment in the government sector where they earn a wage premium. Only secondary education is a predictor of earnings status, and new migrants are most likely to be unemployed. Our analysis therefore contributes to challenging the consensus on high returns to primary education in developing countries. JEL Classification: D45, L10 Keywords: South Africa, Apartheid, Returns to education, Skill-biased technologies. The policy of mission education to train young black girls in domestic skills, such as sewing and cooking, had a further impact. It is against this backdrop that womens dominance in sewing, catering, and small commercial businesses focussed on these items must be understood. [Friedman and Hambridge (1991, p. 170)]