The rate of Return of Education in Malawi

Malawi remains one of the poorest countries in the world with about 54 per cent of its population living below the poverty line. Most of the population derives its livelihood from the agriculture sector which employs about 80 per cent of the workforce and accounts for 39 per cent of gross domestic product (GDP).

This study estimates rates of returns on education from wage employment using both the basic and extended Mincerian earnings functions from the national household survey data collected in 2004/05. The results show that on average, an additional year of schooling increases life time earnings by 10 per cent. It also indicates that returns from various levels of education increase as the levels of education increase from 5 per cent from primary level to 65 per cent from university education. It is also interesting to note that female workers tend to have higher rates of return on education than male workers, particularly at higher levels of education.

In conclusion the authors stated that the very high level of rates of return at higher levels of education suggest the need to expand higher education infrastructure while at the same time ensuring efficiency of education delivery at various levels.