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The importance of cognitive skills in macroeconomic models of growth and development

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  • Gerba, Eddie
  • Pikoulakis, Emmanuel V.

Abstract

In a highly influential and thought provoking study, Hanushek, E.A., and Woessmann, L., (NBER Working Paper No.14633, 2009) provide evidence in favor of a strong causal effect of cognitive skills on growth. To quote: “… the simple premise that improving the schools can produce benefits in national growth rates is strongly supported”. Whilst we concur with this premise, we are rather sceptical whether the Mincerian approach followed by Hanushek and Woessmann (op.cit.) can sufficiently account for the contribution of cognitive skills on national growth rates. To further explore the importance of cognitive skills on growth and development we revisit macroeconomic models where cognitive skills are the key determinant of the path of human capital and its rate of accumulation. Our empirical results strongly support the workings of a “learning-by-doing” hypothesis where cognitive skills together with physical capital determine the paths of human capital, of output per worker, and growth.

Suggested Citation

  • Gerba, Eddie & Pikoulakis, Emmanuel V., 2014. "The importance of cognitive skills in macroeconomic models of growth and development," LSE Research Online Documents on Economics 57207, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:57207
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    More about this item

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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