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Education externalities in rural Ethiopia: evidence from average and stochastic frontier production functions

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  • Sharada Weir
  • John Knight

Abstract

Education will have externality effects in agriculture if, in the course of conducting their own private economic activities, educated farmers raise the productivity of uneducated farmers with whom they come into contact. This paper seeks to determine the potential size and source of such benefits for rural areas of Ethiopia. Average and stochastic frontier production function methodologies are employed to measure productivity and efficiency of farmers. In each case, internal and external returns to schooling are compared. We find that there are substantial and significant externality benefits of education in terms of higher average farm output and a shifting outwards of the production frontier. External benefits of schooling may be several times as high as internal benefits in this regard. However, we are unable to find any evidence of externality benefits to schooling in terms of improvements in technological efficiency in the use of a given technology. This suggests that the source of externalities to schooling is in the adoption and spread of innovations, which shift out the production frontier.

Suggested Citation

  • Sharada Weir & John Knight, 2000. "Education externalities in rural Ethiopia: evidence from average and stochastic frontier production functions," CSAE Working Paper Series 2000-04, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2000-04
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I2 - Health, Education, and Welfare - - Education
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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