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Why do South Korean firms produce so much more output per worker than Ghanaian ones?

  • Francis Teal
  • Simon Baptist
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    The labour productivity differentials between manufacturing firms in Ghana and South Korea exceed those implied by macro analysis.� Median value-added per employee is nearly 40 times higher in South Korea than Ghana.� The most important single factor in explaining this difference is the Mincerian return to skills which differ by a factor of three between Ghana and South Korea.� There is no significant difference in total factor productivity across the countries once we allow for human capital.� Our results are consistent with those who have argued that rises in the return to education within developed countries can be explained by skill-biased technical progress in those economies.� They are also consistent with work in developing countries which finds a convex return to education based on individual labour market data.� Allowing for differences in the shape of the relationship between productivity and human capital across countries is crucial for understanding the role of human capital in increasing productivity.

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    File URL: http://www.csae.ox.ac.uk/workingpapers/pdfs/2008-10text.pdf
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    Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2008-10.

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    Date of creation: 01 Feb 2008
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    Handle: RePEc:oxf:wpaper:wps/2008-10
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    8. Steve Bond & Frank Windmeijer, 2002. "Finite sample inference for GMM estimators in linear panel data models," CeMMAP working papers CWP04/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
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    11. Acemoglu, Daron, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 779-804, August.
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    16. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc.
    17. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    18. Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
    19. Geeta Gandhi Kingdon & Jeemol Unni, 2001. "Education and Women's Labour Market Outcomes in India," Education Economics, Taylor & Francis Journals, vol. 9(2), pages 173-195.
    20. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
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