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A Mediation Analysis on Level of Education and Economic Growth

Author

Listed:
  • Seuk Yen Phoong*

    (Department of Mathematics, Faculty Science and Mathematics, Universiti Pendidikan Sultan Idris, 35900 Tanjung Malim, Perak, Malaysia)

  • Seuk Wai Phoong

    (Department of Operations and Management Information Systems, Faculty of Business and Accountancy, University of Malaya, 50603 Kuala Lumpur, Malaysia)

  • Xiao Jun Tan

    (Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia)

Abstract

This paper examines the relationship between education and economic growth in Malaysia from 1984 to 2012 which is motivated by the issue of the inefficiency of government’s expenditure on education. Specifically, this paper investigates how education levels affect Malaysia’s economic growth directly and indirectly through mediators such as unemployment, fertility and technology innovation via mediation analysis. The empirical results show that primary and tertiary education affects economic growth positively, while secondary education gives a negative effect. It is also discovered that the impact of all education levels on economic growth via indirect effects is higher than the direct effects. Tertiary education has the largest total effect among the other education levels on economic growth and its indirect effect on economic growth through lowering unemployment and fertility and increasing technology innovation is found to be significant.

Suggested Citation

  • Seuk Yen Phoong* & Seuk Wai Phoong & Xiao Jun Tan, 2018. "A Mediation Analysis on Level of Education and Economic Growth," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 417-422:6.
  • Handle: RePEc:arp:tjssrr:2018:p:417-422
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    References listed on IDEAS

    as
    1. Loening, J.L., 2005. "Estimating Human and Physical Capital Stocks in Data-Scarce Environments: A Methodological Note and Application to Guatemala," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 2(1), pages 84-114.
    2. Nickell, Stephen, 1979. "Education and Lifetime Patterns of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 117-131, October.
    3. Kruss, Glenda & McGrath, Simon & Petersen, Il-haam & Gastrow, Michael, 2015. "Higher education and economic development: The importance of building technological capabilities," International Journal of Educational Development, Elsevier, vol. 43(C), pages 22-31.
    4. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    5. Gupta, Manash Ranjan & Chakraborty, Bidisha, 2006. "Human Capital Accumulation and Endogenous Growth in a Dual Economy," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 47(2), pages 169-195, December.
    6. Sawami Matsushita & Abu Siddique & Margaret Giles, 2006. "Education and Economic Growth: A Case Study of Australia," Economics Discussion / Working Papers 06-15, The University of Western Australia, Department of Economics.
    7. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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