The Education System in Malawi
199
Figure 8.9: Mean Monthly Net Income of TEVET Completers 40,000 35,000 30,000
MK
25,000 20,000 15,000 10,000 5,000
(s
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fix in g Ai W cr p r C ec oo et ify ar o d nd ) M ial iti ac , A on d hi in ng mi Com g /F nis pu Ha ab tr w ke ric atio ter S at ci r io n & e n & Acc nce W o C oo un ar ti pe d Pr ng nt o ry an duc Be d Jo ts au in er ty Th y er ap A G VER y en A er G al E Pa Fi in tti Br tin n ic g g an k L El ay ec d D in e tri g ca cor a lI ns tion ta ll E atio Ta Car lect n ilo m ron ai rin ic n s g an ten an d ce D es ig ni ng Fo Pl u od m H Pr bin os od g pi uc ta lit tio Fo y S n od er v Pr ice oc s es si ng
0
Source: Pfeiffer/Chiunda 2008 (Appendix 9).
Rates of Return to Education
A comparative view of the rates of return to different levels of schooling provides evidence of the economic value added to each additional educational level attained. Rates of return (ROR) are assumed to reflect the increased labor productivity induced by education. Private ROR describe the average extra income gained by an individual through additional education in relation to the cost of this education for the individual (including the foregone earnings due to longer studies). The social ROR informs about the gain of society at large. It is calculated by relating the additional expected income to the total cost involved in the education, both private and public. An analysis of the rates of return to each level of schooling in Malawi helps us understand whether investments in education for both private households and society are beneficial, and may serve as a tool to analyze the appropriateness of educational investment. The growing income differential in relation to an increasing level of schooling corresponds with increasing private rates of return to education. Table 8.10 shows very high ROR to education in Malawi, established already in ROR to education analyses in previous years.14 Returns to education appear to be high by African standards. Table 8.11 compares returns in Malawi to those recently calculated with the same methodology for Benin and Congo. The high returns reflect that education is still a rare privilege in Malawi, for which the labor market is prepared to pay a high premium compared to its costs.15