This thesis uses Young Lives data and was submitted in part fulfilment of the requirements for the degree of DPhil in Economics for Development, University of Minnesota.
This paper analyses the urban-rural test score gap in Ethiopia. Currently, more than 80 per cent of the population of Ethiopia resides in rural areas, and there is very little rural-to-urban migration. This paper is the first study that decomposes this educational gap for Ethiopia. The decomposition of the test score gap follows the Blinder-Oaxaca decomposition method. This method allows one to decompose the test score gap into an explained portion (differences in endowments) and an unexplained portion (differences in coefficients). The main contributors to the explained portion of the test score gap are identified (hours of child work, parental education and socioeconomic status of the household). The paper also presents some policies that could be implemented to increase the human capital accumulation process of the vast majority of the Ethiopian population that lives in rural areas.