Influence Of Formal Education On Income Levels Among Small Scale Traders In Oyugis Town, Rachuonyo South Sub County, Homa Bay County, Kenya

Abstract

Investing in human capital is a mandatory requirement in any growing economy. Education contributes directly to the growth of national income by improving the skills and production capacity of the labour force. The purpose of the study was to find the cause of stagnation of SME in Oyugis town hence establish the influence of formal education on income levels among the small - scale traders in Oyugis town, Rachuonyo South Sub-county, Homa-Bay County, Kenya. The study was prompted by slow progress of small - scale businesses in Oyugis town. The objectives of the study were examining education levels of small - scale traders in the town , establishing daily income levels of formal education graduates in small - scale trade in the town and determining daily income differences between the formal education graduates in small- scale trade in the town. The study sought to determine the difference between the mean daily income among different formal education graduates in small -scale trade in Oyugis town. The study adapted the Human Capital Theory of Shultz and the Entrepreneurship Education Theory. The Various skills, knowledge and attitude acquired and gained formed independent variables as they influence income levels. Business returns formed dependent variables. The state of economy and the government legislation that link the two variables formed the intervening variables. The study population was 1286.Of whom, 1239 were small- scale traders and 47 were council workers. Sampling was done taking 10 per cent of the small- scale traders and 10 per cent of council workers. The study employed descriptive survey design. Validity was confirmed by giving proper explanations to ambiguous items. Reliability was found to be about 0.75 per cent. The data which were collected using questionnaires and oral interview were tabulated and analyzed using descriptive statistics measure of central tendency and test of significances; z-test. It was found that the mean daily income for the lower education graduates was Kshs.981.75. While the mean daily income for the higher education graduates was found to be Kshs.1722.30. The significance level between the two categories of small - scale traders in the town per their daily income was calculated using and got to be -15.88. This was statistically and significantly different as it was far below the critical table value of -1.96. The researcher then concluded that the higher the level of formal education, the higher the income level. The study is therefore important for education and policy planners to encourage potential population who intend to join small-scale trade to acquire more education before or after joining the sector. The study therefore calls for further research be done to unearth factors that would influence education graduates to join small - scale trade in small towns as ways of bettering their daily income. The study too recommends research to be done to examine how best formal education would be used to increase income levels of small-scale trade.