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Why and How Education Affects Economic Growth

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  • Joseph Zeira

Abstract

This paper suggests an additional channel through which education affects economic growth. If growth is driven by industrialization of production, where machines replace labor in a growing number of tasks, then operating these machines requires workers who are educated, namely literate and know arithmetic, whose human capital is less specific and more general. As a result, technology adoption depends negatively on wages of educated workers. Hence, economic growth depends negatively on the cost of education or on the barriers to acquire education. The model shows that if the cost of education is high, economic growth might be slow and even stop completely, creating a development trap. Copyright © 2009 The Author. Journal compilation © 2009 Blackwell Publishing Ltd.

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  • Joseph Zeira, 2009. "Why and How Education Affects Economic Growth," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 602-614, August.
  • Handle: RePEc:bla:reviec:v:17:y:2009:i:3:p:602-614
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    Cited by:

    1. Berdugo, Binyamin & Meir, Uri, 2009. "Education, Rent Seeking and Growth," MPRA Paper 18369, University Library of Munich, Germany.
    2. Oscar Iván Ávila Montealegre, 2013. "Política fiscal, desigualdad y crecimiento económico," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
    3. Ralph Hippe & Roger Fouquet, 2015. "The human capital transition and the role of policy," GRI Working Papers 185, Grantham Research Institute on Climate Change and the Environment.
    4. Battisti, Michele & Di Vaio, Gianfranco & Zeira, Joseph, 2013. "Global Divergence in Growth Regressions," CEPR Discussion Papers 9687, C.E.P.R. Discussion Papers.

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