Determinants of Schooling: Empirical Evidence from Rural Ethiopia

We examine the determinants of current enrolment status and relative grade attainment among primary school children in rural Ethiopia. We use repeated cross-sectional data from 15 rural villages in Ethiopia to capture the impact of changing household and child characteristics on enrolment status and relative grade attainment between 1994 and 2004. Using instrument variable (IV) estimation, we find, first, a positive income effect for schooling enrolments and an even stronger effect for relative grade attainment. Second, the effect of income is larger for girls compared to boys. Third, OLS estimates of the impact of household income are biased downwards relative to IV results. Finally, observable community characteristics have little role in explaining schooling. These findings suggest that policies that address the demand-side constraints with a special focus on girls will have the potential to improve schooling attainments as well as to reduce gender differences in schooling attainments found in Ethiopia and elsewhere in sub-Saharan Africa.