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The Effects of Remittances on Output per Worker in S ub‐ S aharan A frica: A Production Function Approach
Author(s) -
Ssozi John,
Asongu Simplice A.
Publication year - 2016
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12100
Subject(s) - productivity , production (economics) , economics , investment (military) , capital (architecture) , total factor productivity , demographic economics , affect (linguistics) , labour economics , production function , physical capital , human capital , function (biology) , factors of production , monetary economics , economic growth , microeconomics , geography , law , evolutionary biology , biology , linguistics , philosophy , archaeology , politics , political science
This paper uses a production function to examine the channels through which remittances affect output per worker in 31 Sub‐Saharan African countries from 1980 to 2010. Lagged remittances increase physical capital per worker, average years of schooling and total factor productivity, but the effectiveness of remittances varies with the income level of the recipient nation. Although remittances have increased both physical capital and total factor productivity among the upper middle income nations, among the lower middle income, they have increased only the physical capital. Meanwhile a reduction in institutional risk has encouraged investment and efficiency, but its relationship to the effectiveness of remittances has been inconclusive.