Private Rates Of Return To Investment In Technical Education: A Case Of Manufacturing Industries In Thika, Kiambu County, Kenya

ABSTRACT

The degree of relationship between cost of education and earnings (Private Rate of Return) (PRR) is a determining factor in making decisions about investment choices in education. The Kenya government and individuals have continued to pay large amount of resources to acquire Technical Education (TE) for individuals to train as Artisans, Crafts persons, Technicians and Technologists whose levels of TE are Grade Test, Certificate, Diploma and Higher Diploma respectively. The monetary gains to individuals with technical skills are unequally distributed among the four cadres. Moreover, these returns are perceived to be low.PRR for the four aforementioned cadres have not been determined. The purpose of this study was to determine the PRR to investment in TE by focusing on technical skilled workers in the manufacturing industries in Thika, Kenya in order to guide policy makers on TE investment. The study objectives aimed to: establish direct private costs of obtaining different levels of TE; establish the lifetime earnings based on the different levels of TE; determine the PRR to different levels of TE; determine the relationship between personal characteristics and lifetime earnings and compare PRR between self-employed and salaried skilled technical workers in Thika. The Human Capital Theory was employed to explain the increase in earnings to additional years of schooling. The study employed descriptive and co-relational designs which embraced quantitative approach. The target population consisted of 1381 technical skilled workers. A sample size of 276 respondents was used. Stratified and simple random sampling techniques were used to select the respondents. A questionnaire for skilled technical workers was used to gather information on costs, levels of TE, earnings and personal characteristics. Test re-test technique was used to ascertain reliability of the instruments using Pearson product-moment correlation coefficient. Content validity of the instrument was determined by specialists in Economics and Planning of Education. Quantitative data was analyzed using both descriptive and inferential statistics through SPSS and STATA. Five hypotheses were tested at 5 percent significant level. Findings revealed that: private direct costs of TE were significantly different at a p value of= 0.000 .There was a positive relationship between lifetime earnings and TE levels at p value of =0.000. Further, there was a significant difference in PRR across the four the levels. There was a positive relationship between personal characteristics and earnings at p=0.000 and that there was no significant difference in PRR by type of employment at p=0.8136 and t statistics of 0.2361. The study concluded that higher diploma is the most expensive but profitable level and lifetime earnings increase with TE levels. PRR by type of employment are similar. The study recommended that individuals investing in TE should opt for extra TE expertise, the national government should introduce free TE for the first three levels and increase bursary to investors as an incentive. Individuals investing in TE should study early in order to reap optimal returns and the national governments should strengthen the components of TE within the secondary school curriculum.