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Human Capital and Economic Growth in OECD Countries Revisited: Initial Stock versus Changes in the Stock of Human Capital Effects

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  • Eftimoski Dimitar

    (St. Clement of Ohrid University, Bitola, N. Macedonia)

Abstract

This paper investigates the effect of human capital on economic growth in OECD countries by focusing on two different channels: (1) absorption of superior technologies, and (2) augmentation of factors of production. One recent empirical study found that in isolation each channel appears insignificant, which implies that estimates that emanate by restrictive specifications that account for only a subset of these channels are likely to suffer from an omitted variable bias. Using an augmented specification (with interaction terms between the initial level of real GDP per capita and the average years of schooling), we find that OECD countries that start with a higher stock of human capital grow faster, which implies that human capital influences economic growth through the first channel only. Our results differ from previous studies (that investigated both channels), which either confirmed the simultaneous (positive or neutral) effect from both channels, or found that only the second channel had an isolated positive effect. We use a broad array of measures as proxies for human capital (six measures for educational attainment, and two measures for health status). We also account for the quality of human capital.

Suggested Citation

  • Eftimoski Dimitar, 2022. "Human Capital and Economic Growth in OECD Countries Revisited: Initial Stock versus Changes in the Stock of Human Capital Effects," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 242(1), pages 1-38, February.
  • Handle: RePEc:jns:jbstat:v:242:y:2022:i:1:p:1-38:n:7
    DOI: 10.1515/jbnst-2020-0060
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    Citations

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    Cited by:

    1. Xiaohao Ding & Yifan Huang & Wenjuan Gao & Weifang Min, 2021. "A Comparative Study of the Impacts of Human Capital and Physical Capital on Building Sustainable Economies at Different Stages of Economic Development," Energies, MDPI, vol. 14(19), pages 1-14, October.
    2. Amjad Taha & Mucahit Aydin & Taiwo Temitope Lasisi & Festus Victor Bekun & Narayan Sethi, 2023. "Toward a sustainable growth path in Arab economies: an extension of classical growth model," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-24, December.

    More about this item

    Keywords

    human capital; economic growth; OECD countries;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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