Rates of return on physical and human capital in Africa's manufacturing sector
AbstractIn this paper two sets of issues are addressed using panel data from the manufacturing sector of five African countries. First, how high are the returns to human relative to physical capital. Second, what is the relative importance of technology and endowments of human and physical capital in determining differences in earnings and productivity across the countries. Evidence from earnings functions shows that the private returns to both experience and education rise with the level of education. Private returns rise from 3 per cent at the primary level, to 10 per cent at the secondary level and 35 per cent for tertiary. Evidence from the production function gives lower returns on education than from the earnings function. Rates of return on physical capital exceed 20 per cent and greatly exceed the average return on human capital. Data is available on the stocks of human and physical capital across the countries. Productivity and earnings differentials are shown to be large between Cameroon and Ghana. These differences are due almost entirely to differences in physical, not human, capital endowments.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 1998-12.
Date of creation: 1998
Date of revision:
investment; human capital; African manufacturing;
Other versions of this item:
- Bigsten, Arne, et al, 2000. "Rates of Return on Physical and Human Capital in Africa's Manufacturing Sector," Economic Development and Cultural Change, University of Chicago Press, vol. 48(4), pages 801-27, July.
- Paul Collier & Marcel Fafchamps & Francis Teal & Stefan Dercon, 1998. "Rates of return on physical and human capital in Africa`s manufacturing sector," Economics Series Working Papers WPS/1998-12, University of Oxford, Department of Economics.
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Simon Appleton & John Hoddinott & John MacKinnon, 1996. "Education and health in sub-Saharan Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(3), pages 307-339.
- Lam. D. & Schoeni, R.F., 1996.
"Effects on Family Background on Earnings and Returns to Schooling: Evidence from Brazil,"
96-13, RAND - Reprint Series.
- Lam, David & Schoeni, Robert F, 1993. "Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 710-40, August.
- James J. Heckman & V. Joseph Hotz, 1986. "An Investigation of the Labor Market Earnings of Panamanian Males Evaluating the Sources of Inequality," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 507-542.
- Krishnan, Pramila, 1996.
"Family Background, Education and Employment in Urban Ethiopia,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 58(1), pages 167-83, February.
- Pramila Krishnan, 1994. "Family background, education and employment in urban Ethiopia," CSAE Working Paper Series 1994-08, Centre for the Study of African Economies, University of Oxford.
- Knight, J & Song, L & Huaibin, J, 1997.
"Chinese Rural Migrants in Urban Enterprises : Three Perspectives,"
Economics Series Working Papers
99190, University of Oxford, Department of Economics.
- John Knight & Lina Song & Jia Huaibin, 1999. "Chinese rural migrants in urban enterprises: Three perspectives," Journal of Development Studies, Taylor & Francis Journals, vol. 35(3), pages 73-104.
- Glewwe, Paul, 1996. "The relevance of standard estimates of rates of return to schooling for education policy: A critical assessment," Journal of Development Economics, Elsevier, vol. 51(2), pages 267-290, December.
- Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
- Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1996. "College Choice and Wages: Estimates Using Data on Female Twins," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 672-85, November.
- White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
- Fallon, P R & Layard, P R G, 1975. "Capital-Skill Complementarity, Income Distribution, and Output Accounting," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 279-301, April.
- Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
- Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
- Owens, Trudy & Wood, Adrian, 1997. "Export-oriented industrialization through primary processing?," World Development, Elsevier, vol. 25(9), pages 1453-1470, September.
- Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, December.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Geeta Gandhi Kingdon, 1997.
"Does the Labour Market Explain Lower Female Schooling in India?,"
STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers
01, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Geeta Gandhi Kingdon, 1998. "Does the labour market explain lower female schooling in India?," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 39-65.
- Adrian Wood & Kersti Berge, 1997. "Exporting manufactures: Human resources, natural resources, and trade policy," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 35-59.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Payne).
If references are entirely missing, you can add them using this form.