Household Schooling Decisions in Tanzania

Abstract

The study utilizes household survey data from 1993/94 to estimate the rate of return to schooling and the indirect as well as the direct costs of schooling. Rates of return at both primary and secondary levels are found to be low by regional standards and costs as a fraction of incomes for the lowest fifth of the population, while affordable for primary school, are very high for secondary school. Indirect, or opportunity, costs are much larger than direct, out-of-pocket, costs. Tanzania's uniquely low secondary enrollment rates can be explained by these factors as much as by supply constraints. Building more secondary schools may not significantly change the situation. Adjusting fees and subsidies would help, but in the end there has to be an improvement in the labor market for educated workers.