Abstract:
This article examines the relationship between human capital accumulation, household income, and shared prosperity using 2005-2018 household surveys in Cameroon, Ethiopia, Kenya, Nigeria, and Uganda. Human capital is found to be positively and significantly correlated with household wellbeing in all five nations. Health's indirect benefits in Cameroon, Ethiopia, and Kenya augment its direct benefits. Education has monotonic welfare benefits from primary to tertiary levels in all countries. Human capital and labour market participation are strongly associated with household wellbeing. The equalization of human capital endowments increases income for the 40% of the least well-off groups in three of the sample countries. All countries except Uganda record a decrease in human capital deprivation over the period studied. Redistribution is associated with a reduction in human capital deprivation, although less systematically than in the growth scenario. These results suggest that sizeable reductions in human capital deprivation are more likely to be accomplished by interventions that focus on boosting general human capital outcomes than those that redistribute the human capital formation inputs. In countries with declining human capital deprivation, the within-sector interventions seem to account for this success. Substantial heterogeneity in human capital poverty exists within and across countries and between rural and urban areas.
