SANEI: Education Research Initiative: Abstract

Education's Role on Employment and Earnings in
Sri Lanka

Since the introduction of a far-reaching economic liberalization programme in 1977, the structure of the Sri Lankan economy has undergone several transformations. As a result, the skill demands and employment creation of the economy has also changed. Sri Lanka has been ahead of other South Asian countries in its achievements in literacy rates and school enrollment rates. However, increasingly the quality and marketability of education in the country is been questioned given high unemployment rates among more educated individuals. These problems are more apparent among the poorer households than the richer. Moreover, although the importance of the informal sector as a provider of employment has increased, the role of education and other factors in improving its productivity has thus far not been examined. In this backdrop, a better understanding of:

1. how education affects employment choices and earnings of individuals,
2. benefits of public spending on education and the role played by private expenditure on education; and,
3. returns to education and their changes over time,

is useful in order to better understand how education policies can be reformed to improve efficiency and use. This study proposes to use newly available more comprehensive data and more rigorous methodology to investigate these issues.