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Matching Up the Data on Education with Economic Growth Models

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  • Papageorgiou Chris

    ()
    (Louisiana State University)

  • Pérez-Sebastián Fidel

    ()
    (Universidad de Alicante)

Abstract

The growth literature has not yet fully established how data on educational attainment should be introduced in theories involving human capital. This paper examines alternative specifications of human capital within the Mincerian class that once incorporated in standard growth models may generate predictions that match up with the existing data on education. First, we analyze predictions in the Bils and Klenow (2000) model and show that although they behave correctly under some parameterizations, they are also subject to some shortcomings. Next, we present a standard neoclassical two-sector growth model that adopts a human capital specification in which the fraction of individual's time endowment in school is viewed as an investment rate. We show that the optimally chosen educational attainment predicted by the calibrated model does not correspond to the data as it is unrealistically high. Finally, we propose an alternative specification of human capital based on a law of motion of educational attainment that successfully matches up with the data.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 5 (2005)
Issue (Month): 1 (April)
Pages: 1-22

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Handle: RePEc:bpj:bejmac:v:topics.5:y:2005:i:1:n:8

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  1. Nancy L Stokey, 1986. "Learning-by-Doing and the Introduction of New Goods," Discussion Papers 699, Northwestern University, Center for Mathematical Studies in Economics and Management Science, revised May 1987.
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  7. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
  8. Schultz, T.P., 1990. "Returns To Women'S Education," Papers 603, Yale - Economic Growth Center.
  9. Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank.
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  11. Fidel Perez Sebastian, 1998. "Transitional Dynamics In An R&D-Based Growth Model With Imitation: Comparing Its Predictions To The Data," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 9802, Departamento de Economía - Universidad Pública de Navarra.
  12. Pritchett, Lant, 1996. "Where has all the education gone?," Policy Research Working Paper Series 1581, The World Bank.
  13. Charles I. Jones, . "Convergence Revisited," Working Papers 96006, Stanford University, Department of Economics.
  14. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November.
  15. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
  16. Stokey, Nancy L, 1996. " Free Trade, Factor Returns, and Factor Accumulation," Journal of Economic Growth, Springer, vol. 1(4), pages 421-47, December.
  17. Klenow, Peter J. & Rodriguez-Clare, Andres, 1997. "Economic growth: A review essay," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 597-617, December.
  18. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
  19. Temple, Jonathan R. W., 2001. "Generalizations that aren't? Evidence on education and growth," European Economic Review, Elsevier, vol. 45(4-6), pages 905-918, May.
  20. Attanasio, Orazio P & Weber, Guglielmo, 1993. "Consumption Growth, the Interest Rate and Aggregation," Review of Economic Studies, Wiley Blackwell, vol. 60(3), pages 631-49, July.
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Cited by:
  1. Delgado, Michael S. & Henderson, Daniel J. & Parmeter, Christopher F., 2012. "Does Education Matter for Economic Growth?," IZA Discussion Papers 7089, Institute for the Study of Labor (IZA).
  2. Tiago Sequeira & Elsa Martins, 2008. "Education public financing and economic growth: an endogenous growth model versus evidence," Empirical Economics, Springer, vol. 35(2), pages 361-377, September.

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