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Private versus social returns to human capital: Education and economic growth in India

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  • Schündeln, Matthias
  • Playforth, John

Abstract

This paper investigates whether differences between private and social returns to education of government sector employees can contribute to an explanation of the “micro–macro paradox” in the literature on education and growth. We hypothesize that in India educated people find privately rewarding jobs in a sector in which social returns are low, namely the government sector. This could help explain high returns to education at the micro level and small or negative coefficients on education growth in growth regressions at the macro level. The empirical results, which are consistent with this hypothesis, are based on an analysis of state-level data from India spanning 40 years.

Suggested Citation

  • Schündeln, Matthias & Playforth, John, 2014. "Private versus social returns to human capital: Education and economic growth in India," European Economic Review, Elsevier, vol. 66(C), pages 266-283.
  • Handle: RePEc:eee:eecrev:v:66:y:2014:i:c:p:266-283
    DOI: 10.1016/j.euroecorev.2013.08.011
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    Cited by:

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    2. Alvarado, Rafael & Cuesta, Lizeth & Kumar, Pavan & Rehman, Abdul & Murshed, Muntasir & Işık, Cem & Vega, Nora & Ochoa-Moreno, Santiago & Tillaguango, Brayan, 2022. "Impact of natural resources on economic progress: Evidence for trading blocs in Latin America using non-linear econometric methods," Resources Policy, Elsevier, vol. 79(C).
    3. Zovanga L Kone & Maggie Y Liu & Aaditya Mattoo & Caglar Ozden & Siddharth Sharma, 2018. "Internal borders and migration in India," Journal of Economic Geography, Oxford University Press, vol. 18(4), pages 729-759.
    4. Ahsan, Humna & Haque, M. Emranul, 2017. "Threshold effects of human capital: Schooling and economic growth," Economics Letters, Elsevier, vol. 156(C), pages 48-52.
    5. Humna Ahsana & M. Emranul Haque, 2015. "Threshold Effects of Human Capital: Schooling and Economic Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 217, Economics, The University of Manchester.
    6. Gille, Véronique, 2015. "Distribution of human capital and income: An empirical study on Indian States," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 239-256.
    7. Rachman, M. Aulia, 2023. "Scholarship for catching up? The Indonesia Endowment Fund for Education (LPDP) scholarship program as a pillar of economic development policy," International Journal of Educational Development, Elsevier, vol. 96(C).

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    More about this item

    Keywords

    Economic growth; Human capital; India;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

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