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Education for Growth: Why and for Whom?

  • Mikael Lindahl
  • Alan B. Krueger

This paper summarizes and tries to reconcile evidence from the microeconometric and empirical macro growth literatures on the effect of schooling on income and GDP growth. Much microeconometric evidence suggests that education is an important causal determinant of income for individuals within countries. At a national level, however, recent studies have found that increases in educational attainment are unrelated to economic growth. This discrepancy appears to be a result of the 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. Another finding of the macro growth literature--that economic growth depends positively on the initial stock of human capital--is not robust when the assumption of a constant-coefficient model is relaxed.

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Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 39 (2001)
Issue (Month): 4 (December)
Pages: 1101-1136

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Handle: RePEc:aea:jeclit:v:39:y:2001:i:4:p:1101-1136
Note: DOI: 10.1257/jel.39.4.1101
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  1. Psacharopoulos, George, 1993. "Returns to investment in education : a global update," Policy Research Working Paper Series 1067, The World Bank.
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  16. Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
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