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Human Capital and Growth: Specification Matters

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  • Sunde, Uwe

    ()

  • Vischer, Thomas

    ()

Abstract

This paper suggests that the weak empirical effect of human capital on growth in existing cross-country studies is partly the result of an inappropriate specification that does not account for the different channels through which human capital aspects growth. A systematic replication of earlier results from the literature shows that both, initial levels and changes in human capital, have positive growth effects, while in isolation, each channel often appears insignificant. Studies that do not account for both channels might underestimate the effect of human capital due to convergence in human capital, in particular when measuring human capital in log average years of schooling. This study therefore complements alternative explanations for the weak growth effects of human capital based on outlier observations and measurement issues.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/econwp/EWP-1131.pdf
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Bibliographic Info

Paper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1131.

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Length: 33 pages
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:usg:econwp:2011:31

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Keywords: Human Capital; Growth Regressions; Specification.;

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  1. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
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  7. de la Fuente, Angel & Doménech, Rafael, 2000. "Human Capital In Growth Regressions: How Much Difference Does Data Quality Make?," CEPR Discussion Papers 2466, C.E.P.R. Discussion Papers.
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  15. Cohen, Daniel & Soto, Marcelo, 2001. "Growth and Human Capital: Good Data, Good Results," CEPR Discussion Papers 3025, C.E.P.R. Discussion Papers.
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  17. Robert J. Barro, 2001. "Human Capital and Growth," American Economic Review, American Economic Association, vol. 91(2), pages 12-17, May.
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  19. repec:hal:wpaper:halshs-00586751 is not listed on IDEAS
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Cited by:
  1. Christian Belzil & J. Hansen & Xingfei Liu, 2012. "Dynamic Skill Accumulation, Comparative Advantages, Compulsory Schooling, and Earnings," Working Papers hal-00657931, HAL.

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