Racial disparities in schooling: Evidence from Cape-Town, South Africa

Racial disparities in education in South Africa have been large and enduring post-apartheid. However, moving beyond simple descriptions of these disparities to a more detailed explanation has proven to be elusive. In this dissertation, I develop and estimate a dynamic model of schooling and labor supply of youths in South Africa, and use it to study several potential explanations for the racial disparities and also evaluate policies aimed to mitigate them. The estimation is based on 1420 males age 12-22, drawn from Cape Area Panel Study (CAPS), a rich longitudinal study of the lives of youths in the post-apartheid era in metropolitan Cape Town, South Africa. I find that apartheid heritage explains 40% of the African-white gap in years of schooling, and 16% of the colored-white gap in years of schooling. My findings highlight the role of financial constraints in explaining racial disparities in education. I find that abolishing secondary school fees in all secondary schools will eliminate 49% of the schooling gap between African and whites and 42% of the schooling gap between coloreds and whites. On the other hand, eliminating school fees only in former (apartheid era) African secondary schools will have a small effect on African schooling and no effect on colored schooling. This finding suggests that in the South African context, financial constraints affect human capital primarily via school quality choices and not via school attendance decisions, casting serious doubts on the effectiveness of recent policies aimed to reduce tuitions in former African schools. The findings further suggest that financial constraints are more important at the secondary school level than they are at the college level. Abolishing college fees without altering secondary school fees will mostly benefit whites and will have a small effect on African and colored schooling.