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Abstract
Over recent decades, Tanzania, like many developing countries, has undertaken reforms that substantially expanded access to education, driving rapid gains in enrollment and attainment and reshaping the composition and supply of the educated workforce. Human capital theory suggests that such rapid growth in educated labor may alter the return to education through supply–demand imbalances in the labor market. Yet empirical evidence on how expanding access affects returns to education in developing countries remains scarce. Using four rounds of comparable, nationally representative labor force surveys spanning 2001 to 2024, this study examines the trends in the private return to education in Tanzania. The estimated return averages 10 percent, remaining high by international standards and consistent with prior evidence. The return to an additional year of schooling declined over the study period, from about 11.5 percent in 2001 to 7.8 percent in 2024. The decline in return is driven by a decline in the wage premium to primary and secondary schooling. The primary premium has eroded to become small and statistically insignificant. The secondary premium falls substantially, while the return to higher education, though gradually declining, remains large and statistically significant. A parallel decline in returns is evident across successive birth cohorts. Together, these patterns indicate that the value of education is increasingly concentrated at higher levels of schooling. As access continues to widen, sustaining returns to education will require labor market policies that stimulate demand for skilled workers through structural transformation, private sector development, and job creation.