Estimating Economic returns to Education in South Africa

One of the most powerful drivers of economic mobility and improved earnings is education. However, the returns to education vary across age, gender, and race. This paper examined the economic returns to schooling in South Africa using data from the General Household Survey (GHS) 2022 with a total sample of 10883. The findings of the study revealed a positive relationship between education and income, suggesting that individuals with a higher education earn more than those with lower or no education. Surprisingly, the findings also showed that individuals with a master’s degree earn more than those with a PhD degree. This may indicate differences in earnings by sector, as most PhD holders are in academia, which does not pay as much as other sectors. The study also confirms the persistent disparities between the previously disadvantaged racial groups and women, who earn less than their male counterparts, even with the same level of education. Furthermore, age and experience positively correlate with earnings. The findings of the study highlight the urgent need for policymakers to address systematic labour market inequality and promote equitable access to quality education for all in South Africa.