Does Education Matter for Economic Growth?

Abstract

Empirical growth regressions typically include mean years of schooling as a proxy for human capital. However, empirical research often finds that the sign and significance of schooling depends on the sample of observations or the specification of the model. We use a non‐parametric local‐linear regression estimator and a non‐parametric variable relevance test to conduct a rigorous and systematic search for significance of mean years of schooling by examining five of the most comprehensive schooling databases. Contrary to a few recent articles that have identified significant nonlinearities between education and growth, our results suggest that mean years of schooling is not a statistically relevant variable in growth regressions. However, we do find evidence (within a cross‐sectional framework), that educational achievement, measured by mean test scores, may provide a more reliable measure of human capital than mean years of schooling.

Does democracy drive income in the world, 1500–2000?

“…However, this result is broadly consistent with , who find a much smaller effect of human capital on growth than many other studies, and attribute this discrepancy to measurement error. In addition, many empirical studies fail to find human capital to be a significant determinant of growth in samples including middle and low income countries in panel estimates (see, for example, Delgado et al, 2014). In our work, the insignificance of the human capital variables is more likely to reflect the fact that education data do not account for the quality of education rather than a lack of growth effects of education.…”

Spillovers from immigrant diversity in cities

“…demonstrate that this issue is not merely theoretical: in a sample of around 300 of the most innovative hightechnology firms in the USA, they show that the hiring of young immigrant workers is associated with increases in the skills available to the enterprise. In this regard, the availability of reliable measures of individual educational attainment would represent an improvement to our approach, though hardly a perfect one, given the noisiness of education as an indicator of human capital (Acemoglu and Autor, 2012;Delgado et al, 2014). Since we lack reliable information on worker quality, we cannot completely exhaust this possibility.…”

The inequality–growth plateau

“…An interesting study by Banerjee and Duflo (2003) adopts this approach based on nonparametric kernel estimation (see, e.g., Delgado et al, 2014 for other examples in growth empirics). However, they do not take into account the panel structure of the data, thereby failing to eliminate the unobserved, time-invariant heterogeneity, a potential source of omitted-variable bias (Forbes, 2000).…”