Rural Household Income: Who's Educational Attainment Counts?

Abstract

Many factors contribute to household income; The key among them is education. This paper seeks to ascertain if there is any difference between the effect of education attainment of the household head and that of the most educated member of the household on household income. The study used data from 400 rural households in Ogoni, Rivers State, Nigeria, selected by a stratified random sample. The data were analyzed using mean difference test and ordinal logistic models. The paper established evidence supporting positive influence of education on household income (p < 0.01). Two methodological conclusions were drawn. First, either education attainment of the household head or education attainment of the most educated member of the household can be used to estimate the influence of education on household income even when the distribution of these two exogenous variables are significantly different. Second, both exogenous variables should not be used together in the same household income function to avoid biased estimates due to collinearity. A major limitation of this study is recommended for further study. That is, the questionnaire used in the study did not provide information on how many household heads are the most educated members of their respective households. The possible endogeneity bias in such situation should be captured in future estimation. The study concludes that improving education attainment of, at least, a household member could be an effective way of increasing household income in rural communities.