Private Returns to Investment in Higher Levels of Education in Kenya

Abstract

A phenomenon in less developed countries has been the rapid growth of schools and institutions of higher learning. One possible explanation is that education is a profitable personal investment, as evidenced by high private rates of return. The high private returns are translated into demands on politicians for additional schooling spaces. To gain/maintain public favor, politicians use their influence to try to increase the number of schools in his constituency. Kenya was selected as a case study for analyzing this phenomenon. This paper has two purposes: (1) to consider the effect of some recent developments on the private rates of return to higher levels of schooling and (2) to determine what would happen to the private rates of return under a number of alternative loan programs.