The Effects of Remittances on Output Per Worker in Sub-Saharan Africa: A Production Function Approach
South African Journal of Economics,84(3), pp. 400-421 (September, 2016).
33 Pages Posted: 22 Dec 2014 Last revised: 10 Sep 2016
Date Written: August 21, 2014
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.
Keywords: remittances, output per worker, total factor productivity, Sub-Saharan Africa
JEL Classification: F22, F24, F35, F43, F63, O15, O16, O43, O55
Suggested Citation: Suggested Citation