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Human capital investment: the returns from education and training to the individual, the firm and the economy

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Author Info
Richard Blundell () (Institute for Fiscal Studies and University College London)
Lorraine Dearden () (Institute for Fiscal Studies and Bedford Group, Institute of Education, University of London)
Costas Meghir () (Institute for Fiscal Studies and University College London)
Barbara Sianesi () (Institute for Fiscal Studies)

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Abstract

This paper provides a non-technical review of the evidence on the returns to education and training for the individual, the firm and the economy at large. It begins by reviewing the empirical work that has attempted to estimate the true causal effect of education and training on individual earnings, focusing on the recent literature that has attempted to control for potential biases in the estimated returns to education and training. It then moves on to review the literature that has looked at the returns from human capital investments to employers. Lack of suitable data and methodological difficulties have resulted in a paucity of studies that have carried out sound empirical work on this issue. In the final part of the review, we look at the work that has tried to assess the contribution of human capital to national economic growth at the macroeconomic level. This work has generally involved using either a ‘growth accounting’ theoretical framework or ‘new growth’ theories. Although the empirical macroeconomic evidence that accompanies this work does not generally allow one to distinguish between the two approaches, there is a substantial body of evidence on the contribution of education to economic growth.

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Publisher Info
Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.

Volume (Year): 20 (1999)
Issue (Month): 1 (March)
Pages: 1-23
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Handle: RePEc:ifs:fistud:v:20:y:1999:i:1:p:1-23

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Related research
Keywords:

Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October. [Downloadable!] (restricted)
  2. Orley Ashenfelter & Cecilia Rouse, 1998. "Income, Schooling, And Ability: Evidence From A New Sample Of Identical Twins," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 253-284, February. [Downloadable!] (restricted)
    Other versions:
  3. Azariadis, Costas & Drazen, Allan, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 501-26, May. [Downloadable!] (restricted)
  4. Bishop, John H, 1990. "Job Performance, Turnover, and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 8(3), pages 363-86, July. [Downloadable!] (restricted)
  5. Barron, John M & Black, Dan A & Loewenstein, Mark A, 1989. "Job Matching and On-the-Job Training," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 1-19, January. [Downloadable!] (restricted)
  6. Blackburn, McKinley L & Neumark, David, 1993. "Omitted-Ability Bias and the Increase in the Return to Schooling," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 521-44, July. [Downloadable!] (restricted)
    Other versions:
  7. Black, Sandra E & Lynch, Lisa M, 1996. "Human-Capital Investments and Productivity," American Economic Review, American Economic Association, vol. 86(2), pages 263-67, May. [Downloadable!] (restricted)
  8. Benabou, Roland, 1996. "Heterogeneity, Stratification, and Growth: Macroeconomic Implications of Community Structure and School Finance," American Economic Review, American Economic Association, vol. 86(3), pages 584-609, June. [Downloadable!] (restricted)
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