Education and Household Welfare in Sri Lanka from 1985 to 2006

This paper looks at the impact of education on household economic welfare in Sri Lanka over twenty years from 1985 to 2006 using five cross section household survey datasets.  Applying quantile regression techniques the analysis finds that the incremental value to household welfare shows a distinct jump for an extra year of education at levels where important national examinations are completed.  Moreover, higher quantiles systematically enjoy greater incremental welfare to education levels between Grade 8 to completed Advanced level examinations.  Both these effects happen partly via the labour market, as labour market returns to employment display similar trends.  The first finding suggests that credentials are important in the labour market.  The second finding suggests that individuals in the upper quantiles probably have better quality education as well as social and analytical skills that complement formal education, enabling them to earn higher returns for their education.