This project has received funding via the research initiative 'Structural Transformation and Economic Growth (STEG), a programme funded by the Foreign, Commonwealth & Development Office (FCDO). The views expressed are not necessarily those of FCDO.
How do the characteristics of regions in African countries affect educational and occupational outcomes of children of different parents? How do geographic mobility decisions across regions within countries shape the individual and aggregate dynamics of these countries? What are the potential gains of policy interventions that change the characteristics of the different regions, thereby changing the relocation of households across locations?
These are the questions this project aims to answer. African countries are at the bottom of the income distribution, lagging behind most other developing countries regarding structural transformation, urbanisation and human capital formation. Beyond the welfare of their inhabitants, the development of Africa and its human capital concerns the entire world economy. African countries dominate the subset of countries in the world for which fertility rates lead to an increasing population of young and prime-aged workers, some of whom end up migrating to Western Europe and, recently, the USA and other developed countries.
This project, focusing on Africa, aims to expand the work on human capital formation along countries' structural transformation and urbanisation. It will use the tools of recent general equilibrium quantitative dynamic spatial models connecting with recent migration/occupation models where the productivity (and learning opportunities) of each location is endogenously determined by the skills of the older generation.
Furthermore, the project proposes homogenising data for many parent-children pairs in African countries from IPUMS-I and the World Bank’s LSMS with other regional and national data. First, we characterise the variation across and within countries on upward international mobility in education and occupations. Second, we propose a simple identification strategy to examine causality. Third, we propose an econometric model to relate the locations' endogenous and exogenous characteristics to the observed patterns in intergenerational mobility. Fourth, we sketch a tractable quantitative model that replicates the observed allocation of the population, earnings, housing costs, and educational and occupational mobility as a general equilibrium of the model. Finally, we propose several counterfactual exercises aiming at concrete policies that foster these African countries' social mobility and welfare and can contribute to their structural transformation and ascension to modern economic growth.