The importance of school quality as a determinant of earnings in a developing country: Evidence from Honduras

Educational expansion is a prominent feature of the economic development strategies of many developing countries. While the potential benefits of greater schooling attainment for subsequent labor market earnings are acknowledged, the potential role played by school quality has largely been neglected for developing countries. This paper combines detailed household survey data with unique data on school quality for Honduras to investigate the importance of school quality for earnings. We employ a structural equations model that treats school quality as a latent variable. Our objective measures of school quality capture teacher training, school infrastructure, and two measures of school crowding. We find strong positive effects of school quality on earnings across a variety of model specifications. in addition, we find that teacher training and school infrastructure are the most important indicators of school quality. (C) 1997 Elsevier Science Ltd.