Labor is (relatively) very expensive in Africa: the case of teachers

This is from Justin Sandefur over at CGD:

Teachers in poor countries earn far more, in relative terms, than teachers in the OECD—and several recent studies suggest their pay isn’t linked to skills or performance. But we also have growing evidence that high-quality teachers generate huge economic returns. The question is how to ensure high pay attracts high quality.

…. This may come as a bit of a surprise to many rich-country readers. There’s no doubt that teachers in, say, India earn much less than teachers in Ireland, but relative to context, they tend to be very well paid. Dividing by per capita GDP is a rough and ready way to put salaries in context. With the help of my research assistant Mallika Snyder, we pulled together teacher salaries from as many countries as possible and ranked them in terms of their ratio to per capita GDP.

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And this is from a World Bank report:

After controlling for a number of factors—such as income per capita, cost of living, firm size, and sector of activity— we see that labor costs in Africa are at least 10 percent higher than they are in East Asia, while South Asia retains its strong comparative advantage over Africa with around 40 percent lower labor costs.

….. in nominal terms, without controlling for any other factors—the South and East Asian regions enjoy a labor cost advantage over Africa of 25 percent and 60 percent, respectively.

One thought on “Labor is (relatively) very expensive in Africa: the case of teachers

  1. Surely measuring as a ratio of teacher salaries to GDP per capita is a meaningless measure. If salaries were converted and compared using purchase price parity or something more comparable, maybe the numbers would be more meaningful.

    Like

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