Private Returns to University Studies, Educational Choices and Youth (Un)Employment: The Case of Tunisia

Abstract: The private returns to education in the Middle East and North Africa have been found to be the lowest worldwide. Considering the low monetary gains associated with university-level studies, why do Arab youth continue to invest so much in their education? Using the most recent data available, I show that the returns to university education in Tunisia are indeed very low. However, my survey data indicates that Tunisian high school students do not overestimate the returns to higher education. An investigation of other potential reasons for the persistently high private investment in education suggests that the desire to obtain a stable public sector job is only a minor motivation for Tunisian students' personal investment in education. Instead, the prospect of successful emigration, intellectual curiosity, and the social status associated with a diploma seem to be the driving forces behind the students' educational choices. Given these findings, I conclude with policy recommendations for improving the efficiency of the skills allocation process, which include most notably more targeted investments in the Tunisian vocational training program, at-tekwyni.