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Education for Growth in Sweden and the World

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Author Info
Alan B. Krueger
Mikael Lindahl

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Abstract

This paper tries to reconcile evidence on the effect of schooling on income and on GDP growth from the microeconometric and empirical macro growth literatures. Much microeconometric evidence suggests that education is an important causal determinant of income for individuals within countries as diverse as Sweden and the United States. At a national level, however, recent studies have found that increases in educational attainment are unrelated to economic growth. This finding is shown to be a spurious result of the extremely high rate of measurement error in first-differenced cross-country education data. After accounting for measurement error, the effect of changes in educational attainment on income growth in cross-country data is at least as great as microeconometric estimates of the rate of return to years of schooling. We also investigate another finding of the macro growth literature -- that economic growth depends positively on the initial stock of human capital. We find that the effect of the initial level of education on growth is sensitive to the econometric assumptions that are imposed on the data (e.g., constant-coefficient assumption), as well as to the other covariates included in the model. Perhaps most importantly, we find that the initial level of education does not appear to have a significant effect on economic growth among OECD countries. The conclusion comments on policy implications for Sweden based on the human capital literature.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7190.

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Date of creation: Jun 1999
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Publication status: published as Swedish Economic Policy Review, Vol. 6, no. 2 (Autumn 1999): 289-339.
Handle: RePEc:nbr:nberwo:7190

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Full references

Cited by:
(explanations, 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. Stepan Jurajda & Janet Mitchell, 2001. "Markets and Growth," GE, Growth, Math methods 0111001, EconWPA. [Downloadable!]
    Other versions:
  2. Neri, F., 2001. "Schooling Quality and Economic Growth," Economics Working Papers wp01-06, School of Economics, University of Wollongong, NSW, Australia. [Downloadable!]
  3. Kaoru Nabeshima, 2003. "Raising the quality of secondary education in East Asia," Policy Research Working Paper Series 3140, The World Bank. [Downloadable!]
  4. William Easterly & Ross Levine, 2002. "It's Not Factor Accumulation: Stylized Facts and Growth Models," Working Papers Central Bank of Chile 164, Central Bank of Chile. [Downloadable!]
  5. Raghbendra Jha & Bagala Biswal & Urvashi D. Biswal, 2001. "An Empirical Analysis of the Impact of Public Expenditures on Education and Health on Poverty in Indian States," Working Papers 998, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  6. Jim Davies, 2003. "Empirical Evidence on Human Capital Externalities," University of Western Ontario, RBC Financial Group Economic Policy Research Institute Working Papers 20035, University of Western Ontario, RBC Financial Group Economic Policy Research Institute. [Downloadable!]
    Other versions:
  7. Arnaud Chevalier & Kevin Denny & Dorren McMahon, 2003. "A Multi-Country Study of Inter-Generational Educational Mobility," Working Papers 200314, School Of Economics, University College Dublin. [Downloadable!]
  8. Chris Papageorgiou & Fidel Pérez Sebastián, 2001. "Can Transition Dynamics Explain The International Output Data?," Working Papers. Serie AD 2001-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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  9. Jayant Ray & FRANCISCO RIVERA-BATIZ, 2002. "An analysis of sample selection bias in cross-country growth regressions," Discussion Papers 0102-10, Columbia University, Department of Economics. [Downloadable!]
  10. Rita Asplund, 2004. "A Macroeconomic Perspective on Education and Inequality," Discussion Papers 906, The Research Institute of the Finnish Economy. [Downloadable!]
  11. Marcelo Eduardo A. da Silva & Alexandre Rands Barros, 2003. "Further Evidence on Wage and Productivity Differentials in Brazil," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] f37, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  12. Chris Papageorgiou & Fidel Pérez Sebastián, 2001. "Growth Miracles Reexamined," Working Papers. Serie AD 2001-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  13. Daron Acemoglu, 2002. "Why Not a Political Coase Theorem? Social Conflict, Commitment and Politics," NBER Working Papers 9377, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Kevin Denny & Colm Harmon & Sandra Redmond, 2000. "Functional literacy, educational attainment and earnings - evidence from the international adult literacy survey," IFS Working Papers W00/09, Institute for Fiscal Studies. [Downloadable!]
  15. Mika Maliranta, 2002. "From R&D to Productivity Through Micro-Level Restructuring," Discussion Papers 795, The Research Institute of the Finnish Economy. [Downloadable!]
  16. Chris Papageorgiou & Fidel Pérez Sebastián, 2002. "Matching Up The Data On Education With Economic Growth Models," Working Papers. Serie AD 2002-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
    Other versions:
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