Using a unique dataset on students from the first regional schools in colonial Benin, we investigate the effect of education on living standards, occupation and political participation. Since both school locations and student cohorts were selected with very little information, treatment and control groups are balanced on observables. We can therefore estimate the effect of education by comparing the treated to the untreated living in the same village, as well as those living in villages where no schools were set up. We find a significant positive treatment effect of education for the first generation of students, as well as their descendants: they have higher living standards, are less likely to be farmers, and are more likely to be politically active. We find large village-level externalities – descendants of the uneducated in villages with schools do better than those in control villages. We also find extended family externalities – nephews and nieces directly benefit from their uncle’s education – and we show that this represents a “family-tax,” as educated uncles transfer resources to the extended family.
The amazing finding is that having just one educated person in an extended family makes a significant difference, not only for the educated person’s offspring, but also for their nieces and nephews:
These descendants have better education at all levels than descendants (either children on nieces and nephews) in families where no progenitor was educated. These effects are statistically significant and substantial – such descendants are 20% more likely to have primary school education, 19% more likely to have secondary school education and 11% more likely to go to university..
The main takeaway of the paper is that investment in human capital has a positive effect on long-term development that is independent of (colonial) institutions.
Dr. Leonard Wantchekon of Princeton has set the ball rolling on what is a promising project.
The [African School of Economics] ASE will meet the urgent need for an academic institution capable of generating the necessary human capital in Africa. Although the region has seen significant improvements in primary and secondary education in the past few decades there is still a pressing need for advanced education centers. Through our PhD programs, we hope to provide the missing African voice in many Africa-related academic debates. Furthermore, through our Master in Business Administration (MBA), Master in Public Administration (MPA), Executive MBA and MPA (EMBA and EMPA), Master in Mathematics, Economics and Statistics (MMES), and Master in Development Studies (MDS) programs, we will provide the technical capacity that will enable more Africans to be hired into top management positions in development agencies and multinational corporations operating on the continent. This will foster sustainable hiring practices that will retain talent and experience in Africa.
The school will open its doors in 2014.
Check out an introductory video by Dr. Wantchekon here.