Ten-Year Impacts of Burkina Faso’s BRIGHT Program

APPENDIX D
MATHEMATICA POLICY RESEARCH
2. Estimating returns to schooling
To calculate the net benefits across years presented in Figure D.1, we need to express the
benefits of the BRIGHT programs in monetary values. To do that, we first estimate the monetary
values of the treatment effects on additional grades attained. The idea is that if children exposed
to the BRIGHT programs progress farther in school than they otherwise would, it will make
them more productive and increase their future earnings. 67 We examine the relationship between
the highest grade achieved and earnings using data from the National Household Surveys in
Burkina Faso conducted in 1994, 1998, 2003, 2010, and 2014 to estimate the increase in earnings
per grade level. This estimate is commonly known as the “rate of returns to schooling.” By using
data from the National Household Surveys from five different years, we obtain a range of
estimates for returns to schooling that are relevant for the Burkina Faso context. This allows us
to estimate the benefits of the BRIGHT program under both high- and low-return scenarios,
which is essentially a sensitivity analysis that examines changes in ERR associated with changes
in this parameter.
We use Mincerian wage regressions (Becker 1975; Mincer 1958, 1974) to estimate the rate
of returns to schooling. Mincer (1958) shows that the natural logarithm of earnings can be
expressed as a function of years of schooling. Specifically we estimate the following Mincerian
regression to estimate returns to schooling in Burkina Faso:
= β + β + δ + ε
(D.1)
ln w i 0 2Educ i
X i 3 i
where ln w i
is the natural log of monthly earnings of individual i, Educ
i
is the highest grade
achieved, X is vector of controls including gender, work experience gained after leaving school,
and post-schooling experience squared. Under the usual OLS assumption, in particular that
Educ
i
is not correlated with ε
i
, equation (D.1) provides a direct measure for returns to
schooling through β
2
, the coefficient of years of schooling.
We estimate the relationship in equation (D.1) for the working-age population, defined to
include all individuals ages 15–70 in Burkina Faso. Earnings were calculated for the main
source 68 of earnings as monthly wage for those working in paid labor and as monthly earnings for
nonwage workers. The 1994, 1998, and 2010 surveys recorded monthly earnings, whereas the
2003 and 2014 rounds gave the respondent the option to report his or her earnings over different
periods, including days, weeks, months, and year. (All reported earnings from the 2003 and 2014
rounds were converted into monthly earnings.) Notice that for farm households, the surveys
recorded (by design) crop sales or nonfarm earnings rather than total earnings that would include
67
We assume that all benefits result from increased schooling and that there is no additional benefit from the quality
of instruction. It is possible that children exposed to the BRIGHT programs learn more than children in traditional
schools even when they progress to the same grade level.
68
The 1994–2003 surveys also collected information on sources of earnings other than the main source. However,
including these other sources has little effect on the estimates. Using the 1994–2003 data, we estimated the
specifications in Table D.10 using all sources of earnings and obtained similar estimates. As a result, we restrict our
attention to only the main activity, allowing us to use the most recent census.
D.18