Education vs TFP: Empirical Evidence from The Sub-Saharan Countries
This 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.
|Date of creation:||2012|
|Contact details of provider:|| Postal: Viale Romania 32 - 00197 Roma|
Phone: 06 85225.550
Fax: 06 85225.973
Web page: http://ricerca.economiaefinanza.luiss.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kraay, Aart & Raddatz, Claudio, 2007.
"Poverty traps, aid, and growth,"
Journal of Development Economics,
Elsevier, vol. 82(2), pages 315-347, March.
- Kraay, Aart & Raddatz, Claudio, 2005. "Poverty traps, aid, and growth," Policy Research Working Paper Series 3631, The World Bank.
- Quah, Danny T, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," Economic Journal, Royal Economic Society, vol. 106(437), pages 1045-1055, July.
- Quah, Danny, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEPR Discussion Papers 1355, C.E.P.R. Discussion Papers.
- David McKenzie & Christopher Woodruff, 2008. "Experimental Evidence on Returns to Capital and Access to Finance in Mexico," World Bank Economic Review, World Bank Group, vol. 22(3), pages 457-482, November.
- Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
- Danny Quah, 1992. "Empirical Cross-Section Dynamics in Economic Growth," FMG Discussion Papers dp154, Financial Markets Group.
- Danny Quah, 1992. "Empirical cross-section dynamics in economic growth," Discussion Paper / Institute for Empirical Macroeconomics 75, Federal Reserve Bank of Minneapolis.
- Nicholas Bloom, 2009. "The Impact of Uncertainty Shocks," Econometrica, Econometric Society, vol. 77(3), pages 623-685, 05.
- Nicholas Bloom, 2007. "The Impact of Uncertainty Shocks," NBER Working Papers 13385, National Bureau of Economic Research, Inc.
- Bewley, Truman, 1977. "The permanent income hypothesis: A theoretical formulation," Journal of Economic Theory, Elsevier, vol. 16(2), pages 252-292, December.
- S. Rao Aiyagari, 1994. "Uninsured Idiosyncratic Risk and Aggregate Saving," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 659-684.
- S. Rao Aiyagari, 1993. "Uninsured idiosyncratic risk and aggregate saving," Working Papers 502, Federal Reserve Bank of Minneapolis.
- Quah, Danny, 1997. "Empirics for Growth and Distribution: Stratification, Polarization, and Convergence Clubs," CEPR Discussion Papers 1586, C.E.P.R. Discussion Papers.
- Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
- Nihal Bayraktar & Hippolyte Fofack, 2011. "Capital Accumulation in Sub-Saharan Africa: Income-group and Sector Differences-super- †," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 20(4), pages 531-561, August.
- Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
- Robert E. Hall & Charles I. Jones, 1998. "Why Do Some Countries Produce So Much More Output per Worker than Others?"," Working Papers 98007, Stanford University, Department of Economics.
- Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
- Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712. Full references (including those not matched with items on IDEAS)