Education, sectoral choice and the urban-rural welfare gap in Sri Lanka

Bandara, Nirodha Anuththari (2017) Education, sectoral choice and the urban-rural welfare gap in Sri Lanka. PhD thesis, University of Nottingham.

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Abstract

This thesis is centred on three core issues in the context of Sri Lanka - the rates of returns to education across individuals in different types of employment, the contributors towards the urban-rural welfare gap for the years 2002 and 2009/10, and finally the determinants of employment and earnings across sectors.

First, the rates of returns to education are analysed using an Instrumental Variables approach in order to address the endogeneity bias associated with measuring education. Secondly, the returns to education are estimated at different levels; a convex relationship between education and earnings is observed. Finally, a production function is estimated for agricultural and non-agricultural self-employed households. Higher education shares a positive relationship with non-agricultural output, but a negative relationship with agricultural output.

In the second part of the thesis, we first identify the determinants of urban and rural expenditure using an unconditional quantile regression. Next, we examine the urban-rural welfare gap in 2002 and 2009/10 using a variant of the threefold Blinder-Oaxaca decomposition; identifying the characteristics and returns to characteristics that contribute towards the welfare gap in both years, and across the expenditure distribution. At a given point in time, the welfare gap is larger between richer urban and rural households relative to poorer households. We find the gap to have fallen considerably between 2002 and 2009/10.

The final part in the thesis examines the sectoral choices and earnings. The labour market is disaggregated into 5 sectors. This chapter controls for two forms of possible bias – sample selectivity and endogeneity of education in earnings. The determinants of sector choice are analysed using a multinomial logit. We observe that individuals with the highest levels of education get in to the public and formal private sectors, whereas the least educated are likely to join the informal and agricultural sectors. The earnings functions suggest that the returns to education vary greatly across the sectors.

Item Type: Thesis (University of Nottingham only) (PhD)
Supervisors: Appleton, Simon
Owens, Trudy
Keywords: Labor supply, Effect of education on, Sri Lanka, Income distribution, Rural conditions
Subjects: H Social sciences > HD Industries. Land use. Labor
Faculties/Schools: UK Campuses > Faculty of Social Sciences, Law and Education > School of Economics
Item ID: 42491
Depositing User: Bandara, Nirodha
Date Deposited: 19 Jul 2017 04:40
Last Modified: 21 Jul 2017 16:32
URI: http://eprints.nottingham.ac.uk/id/eprint/42491

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