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Rediscovering Education in Growth Regressions

Listed author(s):
  • Marcelo Soto

This paper studies the puzzling lack of correlation between income and schooling in macro regressions. It is argued that the root of the puzzle is threefold. First, there is a problem of a proper definition of the way in which years of schooling should enter into a production function. Second, collinearity between physical and human capital stocks seriously undermines the ability of educational indicators to display any significance in growth regressions. Third, failure to cope with measurement error and endogeneity produces biased estimates. After dealing with these problems, the neoclassical approach to human capital is strongly supported by the data ... Ce Document technique examine la curieuse absence de corrélation entre le revenu et la scolarisation que l’on observe dans les régressions macro-économiques. Ce phénomène a trois origines. En premier lieu, un problème de définition de la manière d’intégrer les années de scolarisation dans une fonction de production. En deuxième lieu, l’existence de colinéarités entre les stocks de capital humain et physique affecte grandement la signification des indicateurs d’éducation dans les régressions de croissance. En troisième lieu, la difficulté à corriger les erreurs de mesure et l’endogénéité introduit des biais dans les estimations. Une fois ces problèmes résolus, il apparaît que les données corroborent largement l’approche néoclassique du capital humain ...

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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 202.

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Date of creation: 01 Nov 2002
Handle: RePEc:oec:devaaa:202-en
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