A new way to look at old issues: Worker education and regional economic growth

Human capital investments can improve economic growth in various ways. Nevertheless, existing studies have found that investing in human capital produces minimal returns. However, their results may have been affected by attenuation bias after the application of particular assessment adjustments. In addition, there is no evidence of causality in several studies. Accordingly, this study investigates the effects of human capital investment (in the form of workers' education) on economic growth. Data of 102 nations from 2000 to 2015 are used to discern the yearly effects on the development of services provided by educated workers. Micro-models of the supply of and demand for the services provided by educated workers are estimated with macro production technologies. The findings indicate a significant positive causality between the services provided by educated workers and economic performance, particularly when there is optimal education investment. Investment in education appears to be ideal at roughly three to six numbers of years of education in fields where enterprise-required skills are taught. Economies in which average workers have attained this education level and possess the skills needed by companies in the relevant locations maximize growth. As a result of the economic growth, employment increases for unemployed workers with the enterprise-required skills.