Human Capital Investment in Agriculture for Competitiveness: Discussion Report Section VI

Before beginning a review of his paper let me say that Paul Schultz has written a number of important articles (cited in his references) dealing with the contribution of several aspects of human capital to economic growth and development, and I would encourage you to read them. His work is more general than his presentation for this conference suggests. Schultz focuses here on the impact of schooling, health and migration (three important types of human capital), on wage rates of a sample of male and female wage earners from Ghana and Cote d' Ivoire (1985-9). He uses a flexible hedonic wage function to relate the characteristics of an individual to the hourly wage rate. In this framework, he tests for endogeneity of human capital variables and, when he finds it, he uses instrumental variable estimators in an attempt to reduce possible simultaneous equation biases in the estimated coefficients. The quality of new estimates is, however, affected by the quality of the instruments used to forecast the 'endogenous' variables.