Education And Earnings In South Africa: An Application Of The Mincerian Function

The understanding of the interaction between education and income can never be exhausted, mainly because education remains the leading mechanism for upward social mobility. The argument is that people with higher levels of income are more likely to earn a higher income that those with lower level of education, that?s the rule, although there maybe exceptions to the rule, the numbers for such cases are arguable small. However, there exists differences in the extent to which education influences income, earnings differentials exist by countries and social groups. This paper uses data published in 2017 by Statistics South Africa collected in the general household survey (GHS) which interviewed 72291 individuals across all the 9 provinces of the country. Using a mincerian function the paper estimates returns to education in South Africa. The results show that as expected, there is a positive relationship between education and earnings. The regression results also showed that based on the South African Household data, there is significant difference by race and gender. The results set a basis for re-examining the measurement of the variable used to capture education. The fact that a unit change in years of education is used needs to be changed so that different levels of education a weighted correctly.