Human Capital and French Macroeconomic Growth in the Long Run
Much of the economic growth literature has focused on the contribution of human capital to national development. Two assumptions have remained largely unexamined: (I) economic stability results from economic growth, and (II) investments in human capital result in economic growth (ceteris paribus). This article questions this education-stability link by analyzing regime shifts in the stochastic process of real Gross Domestic Product (GDP) and education expenditures in France over the period 1820-1990. Results indicate that human capital investment prior to 1945 was a response to economic growth. It is only since 1945 that human capital investments appear to drive economic growth. The results raise the question of whether human capital investment might not be as much a consequence as it is a cause of economic stability in the course of time.
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