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Measurement Error in Education and Growth Regressions

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  • Miguel Portela
  • Rob Alessie
  • Coenraad N. Teulings

Abstract

The perpetual inventory method used for the construction of education data per country leads to systematic measurement error. This paper analyses the effect of this measurement error on GDP regressions. There is a systematic difference in the education level between census data and observations constructed from enrolment data. We discuss a methodology for correcting the measurement error. The standard attenuation bias suggests that using these corrected data would lead to a higher coefficient. Our regressions reveal the opposite. We discuss why the measurement error yields an overestimation. Our analysis contributes to an explanation of thedifference between regressions based on 5 and on 10 year first-differences.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2006/wp-cesifo-2006-02/cesifo1_wp1677.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1677.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1677

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Keywords: growth; education; measurement error;

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References

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  1. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
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  21. Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
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Citations

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Cited by:
  1. Bergheim, Stefan, 2007. "Pair-wise cointegration in long-run growth models," Research Notes 24, Deutsche Bank Research.
  2. Tiago Neves Sequeira & Nuno Ferraz, 2008. "Is Education prejudiced by Country-Risk? A Panel-Data Study using Attainment Data and Country-Risk as a Rational Expectation," Working Papers de Gestão, Economia e Marketing (Management, Economics and Marketing Working Papers) e01/2008, Universidade da Beira Interior, Departamento de Gestão e Economia (Portugal).
  3. Sunde, Uwe & Vischer, Thomas, 2011. "Human Capital and Growth: Specification Matters," Economics Working Paper Series 1131, University of St. Gallen, School of Economics and Political Science.
  4. repec:hal:wpaper:halshs-00586751 is not listed on IDEAS
  5. Coen Teuling & Thijs van Rens, 2001. "Education, growth and income inequality," Economics Working Papers 942, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2006.
  6. 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).
  7. Christian Morrisson & Fabrice Murtin, 2009. "The Century of Education," CEE Discussion Papers 0109, Centre for the Economics of Education, LSE.
  8. 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.
  9. Christian Morrison & Fabrice Murtin, 2009. "The century of education," LSE Research Online Documents on Economics 51583, London School of Economics and Political Science, LSE Library.
  10. Bas van Leeuwen & Peter Földvári, 2013. "Capital Accumulation and Growth in Central Europe, 1920-2006," Eastern European Economics, M.E. Sharpe, Inc., vol. 51(5), pages 69-93, September.
  11. Joachim Ragnitz & Stefan Eichler & Beate Grundig & Harald Lehmann & Carsten Pohl & Lutz Schneider & Helmut Seitz & Marcel Thum, 2007. "Die demographische Entwicklung in Ostdeutschland : Gutachten im Auftrag des Bundesministeriums für Wirtschaft und Technologie," ifo Dresden Studien, Ifo Institute for Economic Research at the University of Munich, number 41.

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