Human capital externalities in South Africa

Type Journal Article - Economic Development and Cultural Change
Title Human capital externalities in South Africa
Volume 51
Issue 3
Publication (Day/Month/Year) 2003
Page numbers 603-628
In 1953, the government of South Africa implemented the Bantu Education Act, which restricted the quality of education available to nonwhites. This act, as well as the practice of apartheid, likely had persistent effects on wages and private returns to education. There was a considerable wage gap between blacks and whites in apartheid South Africa, along with wage discrimination against blacks in both the public and the private sectors. Using multivariate analysis, recent empirical studies have investigated similar issues with a special emphasis on the returns to education. These studies find evidence of positive returns to higher education in South Africa. They also find that, among the four races in South Africa, blacks have the highest marginal returns to education. However, Germano Mwanu and T. Paul Schultz find these marginal returns by race, gender, and age groups to be negatively correlated with a measure of the educated cohort because, they argue, of an increased supply of skilled workers.1

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