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Stellenbosch Working Paper Series No. WP07/2011


In South Africa earnings inequality between races still persists despite the convergence of educational attainment between races. There is a now a growing body of evidence which suggests that the quality of education received by South Africans differs markedly amongst and within race groups, and that schools differ substantially in their ability to impart cognitive skills. This difference in education quality between races is apparent to some extent in differing returns to the same levels of educational attainment between races. This paper reviews the international and South African literature which considers the role of education quality in improving labour market prospects. Education quality is considered from both from an input and output perspective. This paper concludes that education output quality, particularly the ability of a school system to impart cognitive skills, is a crucial determinant of labour market success.

Keywords: South Africa, Education, Earnings Functions, Education Quality, Cognitive Skills, Labour Market

JEL Classification: I20, I21, I30, J30