Education vs TFP: Empirical Evidence from The Sub-Saharan Countries
This 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.
|Date of creation:||2012|
|Contact details of provider:|| Postal: Cannaregio, S. Giobbe no 873 , 30121 Venezia|
Web page: http://www.unive.it/dip.economia
More information through EDIRC
References listed on IDEAS
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.:
- S. Rao Aiyagari, 1994.
"Uninsured Idiosyncratic Risk and Aggregate Saving,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 109(3), pages 659-684.
- 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.
- Danny Quah, 1992.
"Empirical cross-section dynamics in economic growth,"
Discussion Paper / Institute for Empirical Macroeconomics
75, Federal Reserve Bank of Minneapolis.
- 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.
- 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.
- 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.
- Nicholas Bloom, 2009.
"The Impact of Uncertainty Shocks,"
Econometric Society, vol. 77(3), pages 623-685, 05.
- 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,"
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.
- 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.
- Bewley, Truman, 1977. "The permanent income hypothesis: A theoretical formulation," Journal of Economic Theory, Elsevier, vol. 16(2), pages 252-292, December.
- 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.
- 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.
- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
When requesting a correction, please mention this item's handle: RePEc:ven:wpaper:2012_27. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Geraldine Ludbrook)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.