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Education externalities in rural Ethiopia: evidence from average and stochastic frontier production functions

  • Sharada Weir
  • John Knight

Education will have externality effects in agriculture if, in the course of conducting their own private economic activities, educated farmers raise the productivity of uneducated farmers with whom they come into contact. This paper seeks to determine the potential size and source of such benefits for rural areas of Ethiopia. Average and stochastic frontier production function methodologies are employed to measure productivity and efficiency of farmers. In each case, internal and external returns to schooling are compared. We find that there are substantial and significant externality benefits of education in terms of higher average farm output and a shifting outwards of the production frontier. External benefits of schooling may be several times as high as internal benefits in this regard. However, we are unable to find any evidence of externality benefits to schooling in terms of improvements in technological efficiency in the use of a given technology. This suggests that the source of externalities to schooling is in the adoption and spread of innovations, which shift out the production frontier.

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Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2000-04.

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Date of creation: 2000
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Handle: RePEc:csa:wpaper:2000-04
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  1. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July.
  2. Sharada Weir, 1999. "The effects of education on farmer productivity in rural Ethiopia," CSAE Working Paper Series 1999-07, Centre for the Study of African Economies, University of Oxford.
  3. Mark Rosenzweig & Andrew D. Foster, . "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Home Pages _068, University of Pennsylvania.
  4. Lockheed, Marlaine E & Jamison, Dean T & Lau, Lawrence J, 1987. "Farmer Education and Farm Efficiency: Reply," Economic Development and Cultural Change, University of Chicago Press, vol. 35(3), pages 643-44, April.
  5. Sharada Weir & John Knight, 2000. "Adoption and diffusion of agricultural innovations in Ethiopia: the role of Education," CSAE Working Paper Series 2000-05, Centre for the Study of African Economies, University of Oxford.
  6. Simon Appleton, 2000. "Education and health at the household level in sub-Saharan Africa," CID Working Papers 33, Center for International Development at Harvard University.
  7. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S3-S39, June.
  8. Croppenstedt, Andre & Muller, Christophe, 2000. "The Impact of Farmers' Health and Nutritional Status on Their Productivity and Efficiency: Evidence from Ethiopia," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 475-502, April.
  9. Lockheed, Marlaine E & Jamison, Dean T & Lau, Lawrence J, 1980. "Farmer Education and Farm Efficiency: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 29(1), pages 37-76, October.
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