Returns to Educational Attainment in Urban Ghana: The Role of Job-to-Job Transition

Abstract

It is well established that additional educational attainment above lower secondary yields higher returns. We find that these returns are mediated by the job transitions, especially for individuals with vocational education. We then study whether the job-to-job transition explains the differences in the returns to educational attainment and find evidence of positive returns of the movement from employee to self-employed. We show that successful employee voluntary move to self-employment to maximize their earnings, while early spell of self-employment tends to have a lasting negative effect on earnings. Our analysis partially explains why self-employment is the top final destination for many workers in developing countries.