The Impact of Cognitive Skills on Income from Farming

Abstract

This chapter begins by estimating the impact of cognitive skills on the incomes of Ghanaians who are self-employed workers in agriculture. These estimates are then combined with estimates from Chapter 4 on the impact of improvements in school quality on cognitive skills to calculate the returns to investments in school quality among Ghanaian farmers. This offers an answer to the question of whether investments in school quality in rural areas are profitable. The methodology differs from traditional methods in two ways: (i) differences in school attainment are not assumed to be direct measures of differences in human capital; and (ii) the focus is on investments in school quality rather than quantity. The argument for this approach, given in detail in Chapter 1, is that it is not years of school attendance per se that increase a worker’s productivity but rather the skills acquired while in school.