Intergenerational Transfers of Human Capital: Evidence on Two Types of Education Externalities

Low enrolment and educational wastage are serious problems in sub-Saharan Africa, particularly in rural areas of Ethiopia where participation in formal education is extremely poor. An aspect of both problems is late entry to primary school, which has dire consequences for educational attainment, most notably for girls. This paper provides evidence on the extent of low enrolment and late entry for a sample of rural households and examines the determinants of each. In particular, the importance of parental and neighbourhood education are considered. We find that the education of both parents is important to enrolment and starting time. Furthermore, education of women in the neighbourhood increases the probability of enrolment. This suggests that there are two types of external benefit of schooling in terms of intergenerational transfers of human capital. Given the large gender bias in enrolments in rural Ethiopia, these findings have important implications for educational policy.