EDUCATION IN PRODUCTION - MEASURING LABOR QUALITY AND MANAGEMENT

Production function studies have used the education of the head of the household or thtr average education of farm workers to assess the con tribution of schooling to farm efficiency. In this paper I critically examine the information content of these measures, by developing a tea m production model which suggests separate education measures to appro ximate labor quality and managerial skills. Empirical analyses based o n Chinese farm household data show that thr new measures are statistic ally superior to the existing alternatives. There is evidence of centr alized decision malting on the farms where the highest schooling contr ibutes the most to production efficiency.