Social Safety Nets: the Role of Education, Remittances and Migration

Background paper to the ERD 2010

Authors

Yaw Nyarko, Department of Economics, New York University
Kwabena Gyimah-Brempong, Department of Economics, University of South Florida

Workshop/conference

Paper prepared for the Conference on “Promoting Resilience through Social Protection
in Sub-Saharan Africa”, organised by the European Report of Development in Dakar, Senegal,
28-30 June, 2010.

Abstract

This paper was presented at the ERD Regional Conference in Dakar, SENEGAL, 28-30 June 2010. We would like to thank Prof. Giorgia Giovanetti for her encouragement in this project. We thank our discussant Prof. Ramon Marimon and the audience at the ERD Senegal conference for their comments on the paper. We would also like to thank David Klinowski, Ella Wind, Silvana Melitsko, and Moussa Blimpo for outstanding research assistance. Any errors, however, are ours.
We study the role of education as a social protection mechanism. We compare the effectiveness of direct cash handouts in comparison to education over the long-term in reducing the vulnerability to poverty. We also look at the role of three inter-related mechanisms related to protection against shocks: Education, Remittances and Migration. We compute internal rates of return to investments education when the objective is social protection or poverty, and not just the value of incomes. We use Ghanaian Livings Survey data and show that, for benchmark interest rates, the returns to primary and secondary education are positive for social protection. This suggests that for the long-run, education may be a more important means of social protection than cash transfers.

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