Effects of financial development and capital accumulation on labor productivity in sub-Saharan Africa: new insight from cross sectional autoregressive lag approach

This study aims to shed light on the effects of financial development and accumulation of capital on the productivity of labor in the sub-Sahara African region within the period of 1990-2018. In this work, we used the (dynamic) common correlated effects estimator-mean group and additional techniques such as cross-section autoregressive distributed lag to calibrate the sample into the African subregion to ensure robustness. The findings reveal that financial progress in the region over time leads to an increase in productivity of labor and also the accumulation of capital. Furthermore, financial markets have a progressive impact on the productivity of labor within sub-Saharan African regions. We extend the very limited literature on the nexus between financial development and labor productivity by incorporating capital accumulation into our model which has not been previously studied.

Automated summary

This study examines the impact of financial development and capital accumulation on labor productivity in sub-Saharan Africa from 1990 to 2018. The analysis utilizes the dynamic common correlated effects estimator-mean group and additional techniques to ensure robustness. The findings indicate that financial progress in the region is associated with increased labor productivity and capital accumulation over time. Furthermore, financial markets have a positive impact on labor productivity in sub-Saharan Africa. This study adds to the limited literature on the relationship between financial development and labor productivity by incorporating capital accumulation.