Impact of Secondary and Tertiary Education on Economic Growth: a Co-integration Model for Bulgaria

The purpose of this study is twofold. First, it tries to check the hypothesis that human capital stimulates growth of the contemporary economies. Second, it estimates the effects of both secondary and tertiary education on the aggregate activity in the Bulgarian economy over the period 2000-2013. The co-integrating models with a structural break are based on the neoclassical approach to growth. The negative impact of secondary education is clearly expressed. A positive statistically significant result has not been found for tertiary education as well. Moreover, in conformity with the real patterns of development the results confirm that the main drivers of Bulgaria’s growth path àre foreign direct investments and export which keeps its crucial role for the post-crisis development. Òhe unfavorable outcome with regard to education might be explained in light of both the vertical qualification mismatch and the quality of human capital. When the latter is measured by foreign language proficiency, a stronger impact on real GDP per capita in comparison with that for the human capital’s quantity has been derived.