The finding of positive and significant returns of 21-42% to primary education in the HE sector is important, as previous analyses of the rates of return to education in Ghana, Tanzania, and Uganda found no significant return to education in wage employment at this level (See World Bank, 2006 on returns to education in wage jobs in Uganda, and Kingdon et. al, 2004, on returns to education in SMEs for Tanzania and Ghana). It is not surprising, therefore, that primary school graduates who are not able to go to secondary school have the highest propensity to create HEs of any education level in the labor force. The limited wage employment opportunities available to these graduates are more likely to be casual labor, which are not secure and may not pay as well as a HE for this group.

The second most important variable in explaining earnings is the gender of the enterprise owner. All countries show a very high male premium in the earnings regression, even after controlling for age, education, and sector of activity. This is puzzling. In Rwanda the premium shows up as 65% of the log of earnings; in Tanzania and Ghana the premium is around 40% - a premium higher than completing primary education. Some of the estimated female earnings gap is likely driven by differences in size, technology, and capital. Unfortunately we do not have good measures of size and capital investment in the HEs, but there are some indications that these aspects vary systematically with gender. For instance; male-owned HE sales are more common in markets and streets compared to at home than female HEs, and male-owned HEs are slightly older on average than female HEs. While we controlled for sector of activity, this was not detailed enough to capture gender segregation, even though such segregation is common.<sup>11</sup> The role of these differences, and other unmeasured personal characteristics and behavior in explaining such a large observed difference in earnings per hour by gender needs more investigation. To the extent that it reflects broader gender inequities in these countries, these factors are not only hurting the business, but the welfare of the household and the broader development process in the country.<sup>12</sup> The analysis did not turn up significant returns to apprenticeships in two out of three countries, an important result given the importance many policy makers place on this training. In Tanzania, the apprenticeship system is not well established; only 8 percent of HE owners reported this type of training. In Rwanda, where the share of HE reporting a past apprenticeship is higher- 20% (compared with 30% in Ghana) - an apprenticeship did yield a positive return. Education and apprenticeship are correlated. In Ghana, most have completed primary education before qualifying for an apprenticeship, although this is not the case in Rwanda where education levels were much lower than in Ghana in 2006.

It might be that the post-primary apprenticeship in Ghana did not provide enough value to compensate for the time spent. Heterogeneous quality of apprenticeships may also affect the result, Unmeasured selectivity variables may be important as well.<sup>13</sup> The occupational segregation by gender associated with traditional apprenticeships may also be a contributing factor. Analysis for Ghana reveals that HE owners who apprenticed in traditionally female occupations as sewing did not end up working in the trade they trained for, showing a mismatch between supply created by traditional apprenticeships and the demand for products. As a result, the value of the training would be worth much less than the time spent. This tendency for girls to be excluded from certain fields in all kinds of vocational training including apprenticeships is well known in SSA (Adams, 2010). Hick et al, 2011 provided new evidence of this problem in

> 11 Field work in Tanzania reported in Kweka and Fox (2011), found that certain services are performed almost exclusively by men (e.g. butchery, shoe shining ) while charcoal sellers were usually women and women’s hair dressing was an exclusively female activity.

> 12 See World Bank, 2011, for discussion of this point, including cross-country evidence.

> 13 This was the conclusion of Quinn and Teal (2008) using urban labor market data.

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