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The role of educational quality and quantity in the process of economic development

  • Castelló-Climent, Amparo
  • Hidalgo-Cabrillana, Ana

We develop a theory of human capital investment to study the effects of school quality on student choices of education, and to understand its effect on economic growth. In a dynamic general equilibrium closed economy, primary education is mandatory but there is an opportunity to continue to secondary education and beyond. High-quality education increases the returns to schooling, and hence the incentives to accumulate human capital. This is caused by two different channels: higher quality makes education accessible to more people (extensive margin), and once individuals decide to participate in higher education, higher-quality increases the investment made per individual (intensive margin). Furthermore, educational quality determines human capital composition and growth. Cross-country data evidence shows that the proposed channels are quantitatively important and that the effect of the quality and quantity of education on growth depends on the stage of development.

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Article provided by Elsevier in its journal Economics of Education Review.

Volume (Year): 31 (2012)
Issue (Month): 4 ()
Pages: 391-409

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Handle: RePEc:eee:ecoedu:v:31:y:2012:i:4:p:391-409
Contact details of provider: Web page: http://www.elsevier.com/locate/econedurev

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