Farm productivity and efficiency in rural Bangladesh: The role of education revisited

This paper reassesses the debate over the role of education in farm production in Bangladesh using a large dataset on rice producing households from 141 villages. Average and stochastic production functions are estimated to ascertain the effect of education on productivity and efficiency. A full set of proxies for farm education stock variables are incorporated to investigate the `internal` as well as `external` returns to education. The external effect is investigated in the context of rural neighbourhoods. Our analysis reveals that in addition to raising rice productivity and boosting potental output, household education significantly reduces production efficiencies. However, we are unable to find any evidence of externality benefit of schooling - neighbour`s education does not matter in farm production. We discuss the implication of these findings for rural education programs in Bangladesh.