Human capital is almost always identified as a crucial ingredient for growing economies, but empirical investigations of cross-national growth have done little to clarify the dimensions of relevant human capital or any implications for policy. This paper concentrates on the importance of labor force quality, measured by cognitive skills in mathematics and science. By linking international test scores across countries, a direct measure of quality is developed, and this proves to have a strong and robust influence on growth. One standard deviation in measured cognitive skills translates into one percent difference in average annual real growth ratesþan effect much stronger than changes in average years of schooling, the more standard quantity measure of labor force skills. Further, the estimated growth effects of improved labor force quality are very robust to the precise specification of the regressions. The use of measures of quality significantly improves the predictions of growth rates, particularly at the high and low ends of the distribution. The importance of quality implies a policy dilemma, because production function estimates indicate that simple resource approaches to improving cognitive skills appear generally ineffective.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
5399.
Length: Date of creation: Dec 1995 Date of revision: Handle: RePEc:nbr:nberwo:5399
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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.:
Barro, Robert J & Sala-i-Martin, Xavier, 1992.
"Convergence,"
Journal of Political Economy,
University of Chicago Press, vol. 100(2), pages 223-51, April.
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