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Human Capital in Growth Regressions: How much Difference Does Data Quality Make?

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  • Angel de la Fuente
  • Rafael Donénech

Abstract

We construct a revised version of the Barro and Lee (1996) data set for a sample of OECD countries using previously unexploited sources and following a heuristic approach to obtain plausible time profiles for attainment levels by removing sharp breaks in the data that seem to reflect changes in classification criteria. It is then shown that these revised data perform much better than the Barro and Lee (1996) or Nehru et al. (1995) series in a number of growth specifications. We interpret these results as an indication that poor data quality may be behind counterintuitive findings in the recent literature on the (lack of) relationship between educational investment and growth. Using our preferred empirical specification, we also show that the contribution of TFP to cross-country productivity differentials is substantial and that its importance relative to differences in factor stocks increases over time ... Nous avons révisé l’ensemble des données de Barro et Lee (1996) pour un échantillon de pays de l’OCDE, en utilisant des sources auparavant inexploitées, en suivant une approche heuristique afin d’obtenir des profils temporels plausibles en ce qui concerne les niveaux d’éducation en supprimant les ruptures importantes dans les séries qui semblent refléter des changements dans les critères de classification. On démontre ensuite que la performance des données révisées est meilleure que celle obtenue en utilisant les séries de Barro et Lee (1996) et de Nehru et al. (1995) dans plusieurs specifications de croissance. Nous interprétons ces résultats comme une indication du fait que la mauvaise qualité des données pourrait être à l’origine des résultats contraires à l’intuition dans la littérature récente sur le lien non-significatif entre l’investissement éducatif et la croissance. En utilisant notre spécification empirique préférée, nous démontrons également que la contribution de la ...

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 262.

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Date of creation: 12 Oct 2000
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Handle: RePEc:oec:ecoaaa:262-en

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Keywords: growth; human capital; croissance; capital humain;

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  1. Zvi Griliches, 1980. "R&D and the Productivity Slowdown," NBER Working Papers 0434, National Bureau of Economic Research, Inc.
  2. Jones, Charles I, 1997. " Convergence Revisited," Journal of Economic Growth, Springer, vol. 2(2), pages 131-53, July.
  3. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November.
  4. Hilary Steedman, 1996. "Measuring the Quality of Educational Outputs: A Note," CEP Discussion Papers dp0302, Centre for Economic Performance, LSE.
  5. Barro, Robert J. & Lee, Jong-Wha, 1994. "Sources of economic growth," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 1-46, June.
  6. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
  7. Prescott, Edward C, 1998. "Needed: A Theory of Total Factor Productivity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 525-51, August.
  8. Zvi Griliches & Jerry A. Hausman, 1984. "Errors in Variables in Panel Data," NBER Technical Working Papers 0037, National Bureau of Economic Research, Inc.
  9. Jonathan R. W. Temple, 1998. "Robustness tests of the augmented Solow model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(4), pages 361-375.
  10. Barro, Robert J & Lee, Jong Wha, 1996. "International Measures of Schooling Years and Schooling Quality," American Economic Review, American Economic Association, vol. 86(2), pages 218-23, May.
  11. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  12. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
  13. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  14. Malcolm Knight & Norman Loayza & Delano Villanueva, 1993. "Testing the Neoclassical Theory of Economic Growth: A Panel Data Approach," IMF Staff Papers, Palgrave Macmillan, vol. 40(3), pages 512-541, September.
  15. Hamilton, James D. & Monteagudo, Josefina, 1998. "The augmented Solow model and the productivity slowdown," Journal of Monetary Economics, Elsevier, vol. 42(3), pages 495-509, October.
  16. Lau, Lawrence J. & Jamison, Dean T. & Louat, Frederic F., 1991. "Education and productivity in developing countries : an aggregate production function approach," Policy Research Working Paper Series 612, The World Bank.
  17. Nehru, Vikram & Swanson, Eric & Dubey, Ashutosh, 1995. "A new database on human capital stock in developing and industrial countries: Sources, methodology, and results," Journal of Development Economics, Elsevier, vol. 46(2), pages 379-401, April.
  18. Malcolm D. Knight & Delano Villanueva & Norman Loayza, 1992. "Testing the Neoclassical Theory of Economic Growth," IMF Working Papers 92/106, International Monetary Fund.
  19. Pritchett, Lant, 1996. "Where has all the education gone?," Policy Research Working Paper Series 1581, The World Bank.
  20. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  21. Behrman, Jere R. & Rosenzweig, Mark R., 1994. "Caveat emptor: Cross-country data on education and the labor force," Journal of Development Economics, Elsevier, vol. 44(1), pages 147-171, June.
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