HUMAN CAPITAL CHANNELS
AND PRODUCTIVITY GROWTH:
EVIDENCE FROM NIGERIA
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Abstract
ABSTRACT. Numerous studies have examined the
relationship between human capital and
productivity. However, the implications of human
capital channels - the ‘basic channel’ and ‘advanced
channel’ - were discounted from most of the
empirical studies in Africa. This study, therefore,
uses Vector Error Correction Model to examine
the joint short- and long-run causality, as well as
long-run behaviour of human capital channels on
productivity within the period from 1980 to 2017.
Evidence from the joint short- and long-run
causality shows that there is no long-run one while
joint short-run causality was observed in the basic
channel, in the advanced channel there is both joint
short- and long-run causality. For the long-run
equation, primary school enrollment/secondary
school enrollments have insignificant effect on
productivity growth while tertiary institution
enrollment and government expenditure on
education have a positive effect on productivity
growth. However, contribution of both effects is
less than one per cent, thus showing low
responsiveness of the inputs on productivity. The
implications from this result are that human capital
formation through education and investment in
research and development have not promoted
productivity in Nigeria. Investment in research and
development is imperative to promote productivity
and enhance the skills needed to adapt and diffuse
new technologies