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The Effects of Remittances on Output per Worker in Sub-Saharan Africa: A Production Function Approach

Ssozi, John and Asongu, Simplice (2014): The Effects of Remittances on Output per Worker in Sub-Saharan Africa: A Production Function Approach. Forthcoming in: South African Journal of Economics

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Abstract

This paper uses a production function to examine the channels through which remittances affect output per worker in 31 Sub-Saharan Africa (SSA) countries from 1980-2010. We find that remittances directly increase output per worker if complemented with education. The indirect effects vary with the economic characteristics of the recipient nations: while remittances have increased human capital among the low-income nations, among the upper-middle-income nations, they have mostly increased total factor productivity, but are still inversely related to factor inputs among the lower-middle-income nations of SSA. Finally, remittances are more effective when institutional risk is reducing.

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