The main objectives of this study are to estimate and analyse the private returns to educationrnand to look into the existence of gender discrimination in the Ethiopian Lab our Market. Thernmethodologies used to that end are the OLS, the Heckman's two-step and the MLE two-steprnProcedures.rnrnThe main findings of the study are the following . Educational investment is paying to anrnindividual. One year of additional schooling, primary, secondary and higher education isrnfound to have a return of 10, 5, 10.6 and 31 percent respectively. These estimates show thatrnthe private return to primary education is the lowest. No significant difference is observedrnbetween the private returns to males and females indicating that the existing disparity inrnenrolments is not explained by returns to education. Family background in the form ofrnmaternal education has been found to have significant impact on chldren's earnings implyingrnthat females' education has trans generational effect. The observed wage differential in thernEthiopian Labour Market is mostly explained by differences in productivity enhancingrnattributes rather than by discrimination.rnrnThere are important policy implications to be drawn. Mere expansion of primary educationrnmay not result in improving the living standards and efforts should be made to revitalise itsrnquality and relevance to the world of work. The government's intention to introduce costs haringrnarrangements at higher education is an optimal policy response to existing economicrnincentives. Improving female enrolments not only will reduce the wage differential betweenrnmales and females but will also have a long-run economic benefit. So, resources should berncommitted to that end.