DOES EDUCATION PLAY A ROLE IN EXPLAINING THE RURAL-URBAN WEALTH GAP? EVIDENCE FROM TANZANIA

This paper examines factors that determine differences in living standards as measured by a wealth index between rural and urban areas in Tanzania, by applying theBlinde r-Oaxaca decomposition method. The rural-urban wealth gap has remained largely unchanged over time while rural-urban differences in educational attainment play a significant role in explaining this gap. Further evidence shows that the wealth gap caused by a differential return to education is also significant. Our results stress theimportanceof improving thequality and quantity of education in rural Tanzania in attempting to decrease the rural-urban wealth gap.