A large number of studies have shown private benefit in schooling investment. In Nigeria, studies have shown that education could generate modest or large private benefits. Moreover, theoretical and empirical literature has made a case for significant educational externalities and studies, using microdata to investigate human capital externalities, have been limited to developed countries, neglecting many Sub-Saharan African countries.
In this paper, schooling externalities in urban Nigeria, and the interactions that produce them, are investigated. The existence of schooling externalities, and the extent to which proximate interactions among individuals are responsible for these human capital externalities, are investigated. The results are robust to test of omitted variables bias.