The Effects of Educational Externalities on Maize Production in Rural Malawi

The paper looks at the existence, nature and form of intra- and inter-household externalities of education on productivity, efficiency and uncertainty of maize production in rural Malawi. Data from the Third Integrated Household Survey are used. I find statistically and economically significant positive intra- and inter-household externalities from education on all three elements, and that intra-household externality effects are larger than inter-household externality ones. Community-level schooling is found to substitute for household-level schooling in the sense that farmers who reside in households where members are not educated nevertheless have relatively higher production and lower production uncertainty, on account of living in communities where some inhabitants are educated. The paper also finds that the intra- and inter-household externality effects are more pronounced for the least efficient farmers, that they are monotonic and that they are largest when average household schooling is relatively low.