Evolution and Dynamics of Education Returns in Uganda

The study examines the dynamics and trends of returns to education and the factors influencing these changes at national and sub-national levels in Uganda, a country that has experienced significant labour market changes. Data was extracted from the most recent three rounds of National Household Surveys (conducted in 2012/13, 2015/16, and 2019/20). On a nationwide scale, our findings indicate that an additional year of education in Uganda corresponds to a substantial 15 percent increase in earnings. However, the study identifies the presence of endogeneity in the relationship between education and earnings. By employing Instrumental Variables, we unveil a significant 5.6 percentage point rise in the earnings premium linked to an extra year of schooling. This research underscores the pivotal role of education in individual income growth, regional disparities, and income distribution, with significant policy implications.