Education vs TFP: Empirical Evidence from The Sub-Saharan Countries
AbstractThis paper investigates the “education-total factor productivity trade-off” in explaining per worker income differences between Sub-Saharan (unlucky) and G7 (lucky) economies. Following Hall and Jones (1999) and Caselli (2005), on a country basis, we are 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). We confirm, according to the related literature, that physical capital and education levels partially explain income differences between unlucky and lucky economies. We show, however, that the impact of ad hoc TFP shocks on per worker income is larger in the unlucky economies than in the lucky ones. The result holds both for negative and positive shocks. In particular, we find that average TFP volatility in the “unlucky world” is eight times higher than the “G7 world” average TFP volatility. As a result we argue that the order of magnitude of the impact heavily depends on the level of the TFP volatility. It turns out that the effect of a TFP shock on a relative low per worker income growth rate is higher. We conclude by arguing that the presence of low levels of per worker capital and of human productivity push the unlucky economies into a poverty trap.
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Bibliographic InfoPaper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2012_27.
Length: 25 p.
Date of creation: 2012
Date of revision:
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Postal: Cannaregio, S. Giobbe no 873 , 30121 Venezia
Web page: http://www.unive.it/dip.economia
More information through EDIRC
Education; Average Years of Schooling; TFP Shocks; Poverty Trap;
Other versions of this item:
- Michael Donadelli, 2012. "Education vs TFP: Empirical Evidence from The Sub-Saharan Countries," Working Papers LuissLab 1299, Dipartimento di Economia e Finanza, LUISS Guido Carli.
- 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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