IDEAS home Printed from https://ideas.repec.org/a/eee/ecoedu/v68y2019icp53-67.html
   My bibliography  Save this article

The economic impact of universities: Evidence from across the globe

Author

Listed:
  • Valero, Anna
  • Van Reenen, John

Abstract

We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at the sub-national level between 1950 and 2010 and find that increases in the number of universities are positively associated with future growth of GDP per capita (and this relationship is robust to controlling for a host of observables, as well as unobserved regional trends). Our estimates imply that a 10% increase in a region's number of universities per capita is associated with 0.4% higher future GDP per capita in that region. Furthermore, there appear to be positive spillover effects from universities to geographically close neighbouring regions. We show that the relationship between GDP per capita and universities is not simply driven by the direct expenditures of the university, its staff and students. Part of the effect of universities on growth is mediated through an increased supply of human capital and greater innovation. Furthermore, we find that within countries, higher historical university presence is associated with stronger pro-democratic attitudes.

Suggested Citation

  • Valero, Anna & Van Reenen, John, 2019. "The economic impact of universities: Evidence from across the globe," Economics of Education Review, Elsevier, vol. 68(C), pages 53-67.
  • Handle: RePEc:eee:ecoedu:v:68:y:2019:i:c:p:53-67
    DOI: 10.1016/j.econedurev.2018.09.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0272775718300414
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.econedurev.2018.09.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
    2. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    3. Valero, Anna & Van Reenen, John, 2019. "The economic impact of universities: Evidence from across the globe," Economics of Education Review, Elsevier, vol. 68(C), pages 53-67.
    4. Edward Glaeser & Giacomo Ponzetto & Andrei Shleifer, 2007. "Why does democracy need education?," Journal of Economic Growth, Springer, vol. 12(2), pages 77-99, June.
    5. Easterly, William & Kremer, Michael & Pritchett, Lant & Summers, Lawrence H., 1993. "Good policy or good luck?: Country growth performance and temporary shocks," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 459-483, December.
    6. Davide Cantoni & Noam Yuchtman, 2014. "Medieval Universities, Legal Institutions, and the Commercial Revolution," The Quarterly Journal of Economics, Oxford University Press, vol. 129(2), pages 823-887.
    7. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    8. Van Reenen, John & Bloom, Nicholas & Sadun, Raffaella, 2016. "Management as a Technology," CEPR Discussion Papers 11312, C.E.P.R. Discussion Papers.
    9. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    10. Alberto Abadie & Susan Athey & Guido W Imbens & Jeffrey M Wooldridge, 2023. "When Should You Adjust Standard Errors for Clustering?," The Quarterly Journal of Economics, Oxford University Press, vol. 138(1), pages 1-35.
    11. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March.
    12. Papaioannou, Elias & Siourounis, Gregorios, 2008. "Economic and social factors driving the third wave of democratization," Journal of Comparative Economics, Elsevier, vol. 36(3), pages 365-387, September.
    13. Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2013. "Human Capital and Regional Development," The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 105-164.
    14. Sharon Belenzon & Mark Schankerman, 2013. "Spreading the Word: Geography, Policy, and Knowledge Spillovers," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 884-903, July.
    15. Nicola Gennaioli & Rafael La Porta & Florencio Lopez De Silanes & Andrei Shleifer, 2014. "Growth in regions," Journal of Economic Growth, Springer, vol. 19(3), pages 259-309, September.
      • Nicola Gennaioli & Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, "undated". "Growth in Regions," Working Paper 73436, Harvard University OpenScholar.
      • Nicola Gennaioli & Rafael La Porta & Florencio Lopez de Silanes & Andrei Shleifer, 2013. "Growth in Regions," NBER Working Papers 18937, National Bureau of Economic Research, Inc.
    16. A. Varga, 2006. "Spatial Knowledge Spillovers and University Research: Evidence from Austria," Springer Books, in: Innovation, Networks, and Knowledge Spillovers, chapter 10, pages 211-232, Springer.
    17. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    18. Daniel Cohen & Marcelo Soto, 2007. "Growth and Education: Good Data, Good Results," PSE-Ecole d'économie de Paris (Postprint) halshs-00754251, HAL.
    19. Luc Anselin & Attila Varga & Zoltan Acs, 2008. "Local Geographic Spillovers Between University Research and High Technology Innovations," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 9, pages 95-121, Edward Elgar Publishing.
    20. Otto Toivanen & Lotta Väänänen, 2016. "Education and Invention," The Review of Economics and Statistics, MIT Press, vol. 98(2), pages 382-396, May.
    21. Jaffe, Adam B, 1989. "Real Effects of Academic Research," American Economic Review, American Economic Association, vol. 79(5), pages 957-970, December.
    22. Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 47-100.
    23. Edward L. Glaeser & Ming Lu, 2018. "Human-Capital Externalities in China," NBER Working Papers 24925, National Bureau of Economic Research, Inc.
    24. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2006. "Growth, distance to frontier and composition of human capital," Journal of Economic Growth, Springer, vol. 11(2), pages 97-127, June.
    25. Nicholas Bloom & Renata Lemos & Raffaella Sadun & John Van Reenen, 2020. "Healthy Business? Managerial Education and Management in Health Care," The Review of Economics and Statistics, MIT Press, vol. 102(3), pages 506-517, July.
    26. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June.
    27. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2005. "From Education to Democracy?," American Economic Review, American Economic Association, vol. 95(2), pages 44-49, May.
    28. Mara P. Squicciarini & Nico Voigtländer, 2015. "Human Capital and Industrialization: Evidence from the Age of Enlightenment," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1825-1883.
    29. Andy Feng & Anna Valero, 2020. "Skill-Biased Management: Evidence from Manufacturing Firms," The Economic Journal, Royal Economic Society, vol. 130(628), pages 1057-1080.
    30. Angel de la Fuente & Rafael Doménech, 2006. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 1-36, March.
    31. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    32. Laura Abramovsky & Helen Simpson, 2011. "Geographic proximity and firm--university innovation linkages: evidence from Great Britain," Journal of Economic Geography, Oxford University Press, vol. 11(6), pages 949-977, November.
    33. Alberto Chong & Mark Gradstein, 2015. "On Education and Democratic Preferences," Economics and Politics, Wiley Blackwell, vol. 27(3), pages 362-388, November.
    34. Bronwyn H. Hall & Adam B. Jaffe & Manuel Trajtenberg, 2001. "The NBER Patent Citation Data File: Lessons, Insights and Methodological Tools," NBER Working Papers 8498, National Bureau of Economic Research, Inc.
    35. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 158-183, December.
    36. Gary S. Becker, 1964. "Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, First Edition," NBER Books, National Bureau of Economic Research, Inc, number beck-5, August.
    37. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    38. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
    39. Shawn Kantor & Alexander Whalley, 2014. "Knowledge Spillovers from Research Universities: Evidence from Endowment Value Shocks," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 171-188, March.
    40. Christian Helmers & Mark Rogers, 2015. "The impact of university research on corporate patenting: evidence from UK universities," The Journal of Technology Transfer, Springer, vol. 40(1), pages 1-24, February.
    41. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    42. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    43. Dias, Joilson & Tebaldi, Edinaldo, 2012. "Institutions, human capital, and growth: The institutional mechanism," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 300-312.
    44. Shawn Kantor & Alexander Whalley, 2019. "Research Proximity and Productivity: Long-Term Evidence from Agriculture," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 819-854.
    45. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    46. Rajagopal, 2014. "The Human Factors," Palgrave Macmillan Books, in: Architecting Enterprise, chapter 9, pages 225-249, Palgrave Macmillan.
    47. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
    48. Baldwin, Richard, 2012. "Global supply chains: Why they emerged, why they matter, and where they are going," CEPR Discussion Papers 9103, C.E.P.R. Discussion Papers.
    49. Naomi Hausman, 2012. "University Innovation, Local Economic Growth, and Entrepreneurship," Working Papers 12-10, Center for Economic Studies, U.S. Census Bureau.
    50. Gabriele Marconi, 2018. "Education as a Long†Term Investment: The Decisive Role of Age in the Education†Growth Relationship," Kyklos, Wiley Blackwell, vol. 71(1), pages 132-161, February.
    51. Anna, Petrenko, 2016. "Мaркування готової продукції як складова частина інформаційного забезпечення маркетингової діяльності підприємств овочепродуктового підкомплексу," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 2(1), March.
    52. Robert J. Barro, 2012. "Convergence and Modernization Revisited," NBER Working Papers 18295, National Bureau of Economic Research, Inc.
    53. Theodore R. Breton & Andrew Siegel Breton, 2016. "Education and Growth: Where All the Education Went," Documentos de Trabajo CIEF 14327, Universidad EAFIT.
    54. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    55. Sharon Belenzon & Mark Schankerman, 2010. "Spreading the Word: Geography, Policy and Knowledge Spillovers," CEP Discussion Papers dp1005, Centre for Economic Performance, LSE.
    56. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
    57. Philippe Aghion, 2009. "Growth and Education," World Bank Publications - Books, The World Bank Group, number 27936, December.
    58. Alberto Chong & Mark Gradstein, 2009. "Education and Democratic Preferences," Research Department Publications 4627, Inter-American Development Bank, Research Department.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anna Valero, 2021. "Education and economic growth," CEP Discussion Papers dp1764, Centre for Economic Performance, LSE.
    2. Sivropoulos-Valero, Anna Alexandra, 2021. "Education and economic growth," LSE Research Online Documents on Economics 114434, London School of Economics and Political Science, LSE Library.
    3. Anna Valero, 2021. "Education and economic growth," POID Working Papers 006, Centre for Economic Performance, LSE.
    4. Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2013. "Human Capital and Regional Development," The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 105-164.
    5. Castelló-Climent, Amparo & Mukhopadhyay, Abhiroop, 2013. "Mass education or a minority well educated elite in the process of growth: The case of India," Journal of Development Economics, Elsevier, vol. 105(C), pages 303-320.
    6. Rossi,Federico, 2018. "Human Capital and Macro-Economic Development : A Review of the Evidence," Policy Research Working Paper Series 8650, The World Bank.
    7. Eric A. Hanushek & Jens Ruhose & Ludger Woessmann, 2017. "Knowledge Capital and Aggregate Income Differences: Development Accounting for US States," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 184-224, October.
    8. William F. Maloney & Felipe Valencia Caicedo, 2017. "Engineering Growth: Innovative Capacity and Development in the Americas," CESifo Working Paper Series 6339, CESifo.
    9. Uwe Sunde & Thomas Dohmen & Benjamin Enke & Armin Falkbriq & David Huffman & Gerrit Meyerheim, 2022. "Patience and Comparative Development [How Large Are Human-capital Externalities? Evidence from Compulsory Schooling Laws]," Review of Economic Studies, Oxford University Press, vol. 89(5), pages 2806-2840.
    10. Andrea Bonaccorsi & Daniele Biancardi & Mabel Sanchez Barrioluengo & Federico Biagi, 2019. "Study on Higher Education Institutions and Local Development," JRC Research Reports JRC117272, Joint Research Centre (Seville site).
    11. Antonio Ciccone & Elias Papaioannou, 2009. "Human Capital, the Structure of Production, and Growth," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 66-82, February.
    12. Eric A. Hanushek & Jens Ruhose & Ludger Woessmann, 2015. "Human Capital Quality and Aggregate Income Differences: Development Accounting for U.S. States," CESifo Working Paper Series 5411, CESifo.
    13. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
    14. Mara P. Squicciarini & Nico Voigtländer, 2015. "Human Capital and Industrialization: Evidence from the Age of Enlightenment," The Quarterly Journal of Economics, Oxford University Press, vol. 130(4), pages 1825-1883.
    15. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    16. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    17. Joan Crespo & Jesús Peiró-Palomino & Emili Tortosa-Ausina, 2020. "Does university performance have an economic payoff for their home regions? Evidence for the Spanish provinces," Working Papers 2020/20, Economics Department, Universitat Jaume I, Castellón (Spain).
    18. Anna Valero, 2021. "Education and management practices," Oxford Review of Economic Policy, Oxford University Press, vol. 37(2), pages 302-322.
    19. Rasmus Thönnessen & Erich Gundlach, 2013. "The size of human capital externalities: cross-country evidence," Public Choice, Springer, vol. 157(3), pages 671-689, December.
    20. Sivropoulos-Valero, Anna Valero, 2021. "Education and management practices," LSE Research Online Documents on Economics 114436, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Universities; Growth; Human capital; Innovation;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecoedu:v:68:y:2019:i:c:p:53-67. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/econedurev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.