Why do South Korean firms produce so much more output per worker than Ghanaian ones?
AbstractThe labour productivity differentials between manufacturing firms in Ghana and South Korea exceed those implied by macro analysis. Median value-added per employee is nearly 40 times higher in South Korea than Ghana. The most important single factor in explaining this difference is the Mincerian return to skills which differ by a factor of three between Ghana and South Korea. There is no significant difference in total factor productivity across the countries once we allow for human capital. Our results are consistent with those who have argued that rises in the return to education within developed countries can be explained by skill-biased technical progress in those economies. They are also consistent with work in developing countries which finds a convex return to education based on individual labour market data. Allowing for differences in the shape of the relationship between productivity and human capital across countries is crucial for understanding the role of human capital in increasing productivity.
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Bibliographic InfoPaper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2008-10.
Date of creation: 2008
Date of revision:
African and Asian manufacturing; productivity; efficiency; human capital.;
Find related papers by JEL classification:
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
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