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Does public expenditure on education matter for growth in Europe? A comparison between old EU member states and post-communist economies

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  • Mariya Neycheva

Abstract

This study examines the impact of education on growth in the EU. Public expenditure on education is used as a proxy for investment in human capital. The empirical model is based on the extended Cobb-Douglas production function with three inputs: labour, physical capital and human capital. The results imply that education spending is positively related to growth in the panel of 20 economies investigated. However, the estimated regression coefficient for the education indicator is both significant and robust to structural breaks in data or extreme observations only in the case of the advanced member states. Spending on R&D is also substantially linked to growth. In the case of post-communist countries, the relationship between education and growth is either statistically insignificant or unstable. The partial correlation analysis implies that the effect of education expenditure on growth is related to its impact on labour productivity.

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  • Mariya Neycheva, 2010. "Does public expenditure on education matter for growth in Europe? A comparison between old EU member states and post-communist economies," Post-Communist Economies, Taylor & Francis Journals, vol. 22(2), pages 141-164.
    • Handle: RePEc:taf:pocoec:v:22:y:2010:i:2:p:141-164
    DOI: 10.1080/14631371003740597
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    2. Mariya Neycheva & Ivan Neychev, 2020. "Overeducation and Economic Growth: Theoretical Background and Empirical Findings for the Region of Central and Eastern Europe," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 124-142.
    3. Awaworyi Churchill, Sefa & Yew, Siew Ling & Ugur, Mehmet, 2015. "Effects of Government Education and Health Expenditures on Economic Growth: A Meta-analysis," EconStor Preprints 110901, ZBW - Leibniz Information Centre for Economics.
    4. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    5. Ricardo Ferraz, 2022. "The Portuguese Military Expenditure from a Historical Perspective," Defence and Peace Economics, Taylor & Francis Journals, vol. 33(3), pages 347-365, April.
    6. Mariya Neycheva, 2016. "Secondary versus higher education for growth: the case of three countries with different human capital’s structure and quality," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(6), pages 2367-2393, November.
    7. Chen, Yang & Fang, Zheng, 2018. "Industrial electricity consumption, human capital investment and economic growth in Chinese cities," Economic Modelling, Elsevier, vol. 69(C), pages 205-219.
    8. Trofimov, Ivan D., 2020. "The optimum size of public education spending: panel data evidence," MPRA Paper 106847, University Library of Munich, Germany.
    9. Pierre LESUISSE, 2024. "Education, public expenditure and economic growth under the prism of performance," Working Papers of BETA 2024-10, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    10. Tatjana Stevanoviæ & Maja Ivanoviæ-Ðukiæ & Tamara Raðenoviæ & Ognjen Radoviæ, 2018. "The impact of national intellectual capital on the economic growth in the South-Eastern European Countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(2), pages 777-800.
    11. Abbas, Syed Ali & Selvanathan, Eliyathamby A. & Selvanathan, Saroja & Bandaralage, Jayatilleke S., 2021. "Are remittances and foreign aid interlinked? Evidence from least developed and developing countries," Economic Modelling, Elsevier, vol. 94(C), pages 265-275.
    12. Beznoska, Martin & Kauder, Björn & Obst, Thomas, 2021. "Investitionen, Humankapital und Wachstumswirkungen öffentlicher Ausgaben," IW policy papers 2/2021, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    13. Pierre Lesuisse, 2022. "Education, public expenditure and economic growth under the prism of performance," Working Papers hal-03685311, HAL.

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