Externalities of Education on Productivity, Efficiency, and Production Uncertainty of Maize in Rural Malawi

Mussa, Richard (2014): Externalities of Education on Productivity, Efficiency, and Production Uncertainty of Maize in Rural Malawi.

Abstract

The paper looks at the existence, nature and form of intrahousehold and interhousehold externalities of education on productivity, efficiency, and production uncertainty of maize in rural Malawi. Data from the Third Integrated Household Survey are used. I find statistically and economically significant positive intrahousehold and interhousehold externalities of education on both productivity, efficiency, and production uncertainty, and that the intrahousehold externality effects are larger than interhousehold externality effects. Community level schooling is found to substitute for household level schooling in the sense that farmers who reside in households where members are not educated have relatively higher production, and lower production uncertainty on account of living in communities where some inhabitants are educated. The paper also finds that the intrahousehold and interhousehold externality effects are more pronounced for the least efficient farmers, and that they are monotonic, and largest when schooling is relatively low.

• Item Type: MPRA Paper
• Language: English
• Keywords: intrahousehold; interhousehold;externality; Malawi
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics

References

Appleton, S. & Balihuta, A. (1996).) Education and agricultural productivity: evidence from Uganda, Journal of International Development, 8, pp. 415-444.

Asadullahah, M. N. & Rahman, S. (2009). Farm productivity and efficiency in rural Bangladesh: the role of education revisited, Applied Economics, 41, pp. 17-33.

Asselin, L.M. (2002). Multidimensional poverty: Composite indicator of multidimensional poverty. Levis, Quebec: Institut de Mathematique Gauss.

Basu, K. & Foster, J. E. (1998).) On measuring literacy, Economic Journal, 108, pp. 1733-1749.

Basu, K., Narayan, A. & Ravallion, M. (2002) Is literacy shared within households? Theory and evidence for Bangladesh, Labour Economics, 8, pp. 649-665.

Battese, G. E. & Coelli, T. J. (1988) Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data, Journal of Econometrics, 38, pp. 387-399.

Battese, G. E. & Coelli, T. J. (1995) A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data, Empirical Economics, 20, pp. 325-332.

Bera, A. K. & Sharma, S. C. (1999) Estimating Production Uncertainty in Stochastic Frontier Production Function Models, Journal of Productivity Analysis, 12, pp. 187-210.

Blasius, J. & Greenacre, M. (2006). Correspondence analysis and related methods in practice. In M.Greenacre, & J. Blasius (Eds.), Multiple correspondence analysis and related methods (pp. 3-40). London: Chapman & Hall.

Caudill, S. B., J. M. Ford & Gropper, D. M. (1995) Frontier Estimation and Firm-Specific Inefficiency Measures in the Presence of HeteroskedasticityHeteroscedasticity, Journal of Business and Economic Statistics, 13, pp.105-111.

Chirwa, E. & Dorward, A., (2013). Agricultural Input Subsidies: The Recent Malawi Experience, Oxford: Oxford University Press.

Coelli, T. J. (1995) Estimators and hypothesis tests for a stochastic frontier function: A Monte Carlo analysis, Journal of Productivity Analysis, 6, pp. 247-268.

Coelli, T. J. & Battese, G. E. (1996).) Identification of Factors which Influence the Technical Inefficiency of Indian Farmers, Australian Journal of Agricultural Economics, 40, pp. 103-128.

Deininger, K. & Jin, S. (2006) Tenure security and land related investment: evidence from Ethiopia, European Economic Review, 50, pp. 1245-1277.

Dinar, A., Karagiannis, & Tzouvelekas, G. V. (2007) Evaluating the impact of agricultural extension on farms performance in Crete: a nonneutral stochastic frontier approach, Agricultural Economics, 36, pp.133-144.

Dorward, A., & E. Chirwa. (2011). The Malawi Agricultural Input Subsidy Programme: 2005/06 to 2008/09, International Journal of Agricultural Sustainability, 16, pp. 232-247.

Dreze, J. & Saran, M. (1995) Primary education and economic development in China and India:overview and two case studies'. In Choice, Welfare and Development (K. Basu, P. K. Pattanaik and K Suzumura eds.), Oxford: Clarendon Press.

Ecker O., & Qaim, M. (2011) Analyzing Nutritional Impacts of Policies: An Empirical Study for Malawi, World Development, 39, pp. 412-428.

Fields, GS. (2011). Labor Market Analysis for Developing Countries, Labour Economics,18, pp.16-22.

Foltz, J., U. Aldana, & Laris , P.( 2012). The Sahel's Silent Maize Revolution: Analyzing Maize Productivity in Mali at the Farm-level, NBER Working Paper #17801.

Gille, V. (2012) Education spillovers: empirical evidence in rural India, Indian Growth and Development Review, 5, pp.4-24.

Government of Malawi (2011) Malawi Growth and Development Strategy II, 2011-2016, Lilongwe: Ministry of Finance and Economic Planning.

Hadri, K. (1999) Estimation of a Doubly Heteroscedastic Stochastic Frontier Cost Function, Journal of Business and Economic Statistics, 17, pp. 359-363.

Huang, C. J. & J. T. Liu (1994) Estimation of a Non-Neutral Stochastic Frontier Production Function, Journal of Productivity Analysis, 5, pp. 171-180.

Knight, J., Weir, S. & Woldehanna, T. (2003) The role of education in facilitating risk-taking and innovation in agriculture, Journal of Development Studies, 39, pp. 1-22.

Kumbhakar, S. C., S. Ghosh & J. T. McGuckin. (1991) A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms, Journal of Business and Economic Statistics, 9, pp. 279-286.

Liu, Y, & Myers, R. (2009) Model selection in stochastic frontier analysis with an application to maize production in Kenya, Journal of Productivity Analysis, 31, pp. 33-46.

NSO (National Statistics Office) (2005) Integrated Household Survey 2004-2005. Volume I: Household Socio-economic Characteristics, National Statistics Office, Zomba, Malawi.

NSO (National Statistics Office) (2012a. Quarterly Statistical Bulletin, National Statistics Office, Zomba, Malawi.

NSO (National Statistics Office) (2012b) Integrated Household Survey 2010-2011.2004-2005. Household Socio-economic Characteristics Report, National Statistics Office, Zomba, Malawi.

Psacharopoulos, G. (1994). Returns to investment in education: A global update. World Development, 22, pp.1325-1343.

Psacharopoulos, G. and Patrinos, H. A. (2004). Returns to Investment in Education: A Further Update, Education Economics, 12, pp. 111-134.

Ricker-Gilbert, J., T.S. Jayne, & E. Chirwa. (2011). Subsidies and Crowding Out: A Double-Hurdle Model of Fertilizer Demand in Malawi, American Journal of Agricultural Economics, 93, pp. 26-42.

Ricker-Gilbert, J. (2014). Wage and Employment Effects of Malawi's Fertilizer Subsidy Program, Agricultural Economics, 45, 337-353.

Ricker-Gilbert, J., Jayne, T., & Shively, G., (2013). Addressing the `Wicked Problem' of input subsidy programs in Africa, Applied Economic Perspectives and Policy, 35, pp. 322-340.

Sherlund S, Barrett C, & Adesina, A. (2002) Smallholder technical efficiency controlling for environmental production conditions, Journal of Development Economics, 69, pp. 85-101.

Schultz, P. (2004). Evidence of Returns to Schooling in Africa from Household Surveys: Monitoring and Restructuring the Market for Education, Journal of African Economies, 13, pp. 95-148.

Seyoum, E. T., Battese, G. E. & Fleming, E. M. (1998) Technical efficiency and productivity of maize producers in eastern Ethiopia: a study of farmers within and outside the Sasakawa Global 2000 project, Agricultural Economics, 19, 341-348.

Siphambe, H.K. (2000). Rates of Return to Education in Botswana, Economics of Education Review, 19, pp. 291-300.

Söderbom, M., Teal, F., Wambugu, A., & Kahyarara,G. (2006). The dynamics of returns to education in Kenyan and Tanzanian manufacturing. Oxford Bulletin of Economics and Statistics, 68, pp. 261-396.

Udry, C. (1996). Gender, Agricultural Production and the Theory of the Household, Journal of Political Economy, 104, pp. 1010-1046.

Wang, H.J. (2002) Heteroscedasticity and non-monotonic efficiency effects of a stochastic frontier model, Journal of Productivity Analysis, 18, pp. 241-253.

Weir, S. & Knight, J. (2004) Externality effects of education: dynamics of the adoption and diffusion of an innovation in rural Ethiopia, Economic Development and Cultural Change, 53, pp. 93-113.

Weir, S. & Knight, J. (2007) Production externalities of education: evidence from rural Ethiopia, Journal of African Economies, 16, pp. 134-65.

World Bank (1995). Priorities and strategies for education: A World Bank sector review. Washington, DC: Education and Social Policy Department.

World Bank (2013) Malawi Public Expenditure Review, Report No. 79865-MW.