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Education is widely recognized as a key determinant of earnings through its contribution to human capital accumulation. However, in developing countries characterized by segmented labor markets, the economic returns to education may differ substantially across sectors of activity. This study examines the differentiated effects of education on youth earnings in Burkina Faso, with particular attention to the formal and informal sectors. Using data from the 2018 Integrated Regional Survey on Employment and the Informal Sector (ERI-ESI), the analysis focuses on individuals aged 15 to 34 and adopts a dual methodological strategy. First, an ordinary least squares model with interaction terms is estimated to assess whether the returns to education vary by sector of employment. Second, a causal mediation approach is applied to distinguish the direct effect of education on earnings from the indirect effect operating through access to the formal sector.The results indicate that education has a positive and statistically significant impact on earnings, increasing youth income by approximately 44% on average. Employment in the formal sector is associated with a substantial wage premium, estimated at about 76%. However, the interaction between education and sector of activity is not statistically significant, suggesting limited variation in educational returns across sectors. Mediation results show that only a small share of the total effect of education on earnings operates through sectoral access, while the dominant effect is direct. These findings have important implications for education and employment policies in labor markets dominated by informality.
Ouédraogo et al. (Mon,) studied this question.