Human Capital and Remittance in the Sub Sahara Africa: a System - Generalized Methods of Moment (GMM) Approach

The rising volume of remittances into Sub Saharan Africa and the unimpressive human capital index has continued to generate major concern for development economists in recent years. The study investigated the relationship between human capital and remittance in the Sub Saharan Africa (SSA). Secondary data from 1980 to 2022 were collected on the variables under investigation. The two steps system GMM (Generalized Methods of Moment) which is capable of yielding better estimator than other forms of GMM due to its ability to generate smaller asymptotic variance is applied in the study due to its superiority in treating endogeneity, serial correlation, and heteroscedasticity problems in panel data. Findings from the study show that remittance in SSA has not significantly impacted human capital in the GMM models employed. The economic growth of the SSA countries has not been driven by human capital in the sub-region significantly. Other factors such as physical capital and population are more important shift factors of human capital in the SSA. Previous studies on this in SSA have focused on economic growth and remittance without considering an important channel like human capital that can transmit the impacts of remittance on growth.