Selection into Formal and Informal Employment in Uganda: The Role of Education

Abstract

This paper examines the role of educational attainment in being employed in Uganda. Using household panel data for four waves; 2005/06, 2009/10, 2010/11 and2011/12, the study estimates correlated random effects models and analyses theeducation-employment relationship.   We find a positive association betweeneducational attainments and "not-working" in the static model but when statedependence is accounted for, the association disappears for all education levels exceptdegree education which is not significant at conventional levels.   Therefore, it can beconcluded that the observed positive association between education and "not-working" is a short term effect for individuals with less than degree education, but may persistfor individuals with degree education. With reference to informal sector employment,the results are mixed. They depict a heterogeneous sector which is hierarchical,whereby more educated individuals are observed in informal salaried work and lesseducated individuals are observed working in household enterprises.   Further, thereis a positive association between education and employment status which is strongestin the formal sector. All results vary by age group, gender and residence.Keywords: Uganda, Employment, Formal, Informal and Education.JEL Classification: J00, J01, J24