Educational Efficiency in Smallholder Agriculture in Sri Lanka: Evidence from Ordinary Least Squares and Instrumental Variable Estimation

This study examines educational efficiency within Sri Lanka’s smallholder agricultural sector using HIES 2019 data for 2,860 agricultural household heads. A Mincerian semi-log agricultural income model was estimated using OLS and Instrumental Variable (IV) techniques to address possible endogeneity of education. OLS results indicate modest returns to education of about 1.9% per additional year of schooling, while agricultural input expenditure, land ownership, and farming experience exerted stronger positive effects on income. However, IV estimates rendered education statistically insignificant. The findings suggest that improving agricultural income requires strengthening the broader productive environment and complementing formal education with extension-oriented agricultural training.