The Economics of Educational Investment in Cameroon.

Author: Tafah, Edokat Edward Oki

Supervisors: Umo J. U. and Ubogu R. E.

The main purpose of this study is to assess both the internal and external efficiency of Cameroonian education through the estimation of educational production and cost functions, as well as earnings functions. In examining the external efficiency through the estimation of earnings function the basic assumption is that earnings of workers reflect their productivities. In addition to the above objective, the study also attempts to estimate the rates of returns to the various levels of education, and to examine to what extent educational investment has served to reduce or increase income inequality among Cameroonian workers. The main tool of analysis in the study is the Ordinary Least Squares (OLS) regression technique and data was drawn from 258 Primary schools, 119 Secondary schools (for educational and costs functions) and 1649, government employees (for the rest of the analyses). The following results emerge from the study: (i) School environment variables, especially the number of teachers in a school are the most important determinants of students cognitive achievement at both levels of education. (ii) There is scope for the existence of economics of scale in schools operations in Cameroon. (iii) Human capital investment and the generalized earnings models are empirically verified for Cameroon. In particular, we find that years of schooling is the most important determinant of earnings; earnings functions are concave with age; non-schooling variables such as occupation, job status position, as well as sex, among others, influence earnings in different ways. (iv) The social rates of returns to the various levels of education are as follows: 72.2 percent for Ph.D; 62.2 percent for M.A; 114 percent for B.A; 41.3 percent for Diploma; 38.1 percent for Advanced Level; and 6 percent for Ordinary Level. The respective private rates are 70.3 percent, 62.4 percent, 113.8 percent; 40.7 percent, 38.3 percent, and 6.1 percent. (v) Schooling alone explains about 92 percent of relative income dispersion among Cameroonian workers. The policy implications drawn from the above findings include, among others: (a) there is need to increase the quantitative and qualitative inputs of the educational system, as well as consolidating existing schools, especially at the secondary school level; (b) intermediate stages of the educational system that tend to increase age at graduation should be eliminated. (c) educational resources should be rationally distributed to all sectors of education to maintain balance growth; (d) given the relative positive and high rates of return to education especially at the higher level, government should commit more resources to the educational sector especially at the tertiary level; (e) given that there is only a marginal difference between social and private rates of returns to education, it implies that the tax rate is regressive. Consequently, it becomes necessary for the government to devise a more appropriate tax structure which should not only provide more resources for educational investment but also make the beneficiaries of education, especially at the tertiary levels, bear a significant burden of their education as a means of averting the intergenerational transfer of inequality; (f) other factors such as vocational training and experiences should be used to determine salaries and/or wages rather than relying solely on years of formal educational as is currently the case in Cameroon.