Education vs TFP: Empirical Evidence from The Sub-Saharan Countries
AbstractThis paper investigates the \education-total factor productivity trade-o " in explaining per worker income di erences between Sub-Saharan (unlucky) and G7 (lucky) economies. Following Hall and Jones (1999) and Caselli (2005), on a country basis, I am able to study separately the dynamic of the average years of schooling (i.e. education level), the per worker capital, the per worker income, and the total factor productivity (TFP). I con rm that physical capital and education levels partially explain income di erences between unlucky and lucky economies. In a time-series setup I create, on a country-by-country basis, ad hoc TFP shock times series. The main result of this paper is that the impact of TFP shocks on per worker income is larger in unlucky economies than in lucky ones. The result holds both for negative and positive shocks. I show that average TFP volatility in the "unlucky world" is 8 times higher than the "G7 world" average TFP volatility. I argue that the order of magnitude of the impact heavily depends on the level of the TFP volatility. It turns out also that the e ect of a TFP shock on a relative low per worker income growth rate is higher. I conclude by arguing that the presence of low levels of per worker capital and of human productivity pushes the unlucky economies into a poverty trap.
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Bibliographic InfoPaper provided by Dipartimento di Economia e Finanza, LUISS Guido Carli in its series Working Papers LuissLab with number 1299.
Date of creation: 2012
Date of revision:
Education; TFP Shocks; Poverty Trap;
Other versions of this item:
- Guido Cazzavillan & Michael Donadelli, 2012. "Education vs TFP: Empirical Evidence from The Sub-Saharan Countries," Working Papers 2012_27, Department of Economics, University of Venice "Ca' Foscari".
- I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
- I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
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