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Rediscovering Education in Growth Regressions

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  • Marcelo Soto

Abstract

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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  • Marcelo Soto, 2002. "Rediscovering Education in Growth Regressions," OECD Development Centre Working Papers 202, OECD Publishing.
  • Handle: RePEc:oec:devaaa:202-en
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    File URL: http://dx.doi.org/10.1787/204207141003
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    Cited by:

    1. Kaushik, Surendra K. & Kaushik, Shorav & Kaushik, Shobha, 2006. "How higher education in rural India helps human rights and entrepreneurship," Journal of Asian Economics, Elsevier, vol. 17(1), pages 29-34, February.
    2. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March.
    3. Heinz Handler & Andreas Knabe & Bertrand Koebel & Margit Schratzenstaller & Sven Wehke, 2005. "The Impact of Public Budgets on Overall Productivity Growth," WIFO Working Papers 255, WIFO.
    4. Gilbert Cette & Rémy Lecat & Carole Ly-Marin, 2017. "Long-term growth and productivity projections in advanced countries," OECD Journal: Economic Studies, OECD Publishing, vol. 2016(1), pages 71-90.
    5. Shaukat Hameed Khan, 2009. "Making People Employable: Reforming Secondary Education in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 603-617.
    6. Aleksandar VASILEV, 2015. "Growth and convergence in the Central and East European countries towards EU (1992-2002)," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 6, pages 63-89, June.
    7. Faiza A. Khan, 2014. "Economic Convergence in the African Continent: Closing the Gap," South African Journal of Economics, Economic Society of South Africa, vol. 82(3), pages 354-370, September.
    8. Diego Battistón & Carolina García-Domench & Leonardo Gasparini, 2014. "Could an Increase in Education Raise Income Inequality? Evidence for Latin America," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 51(1), pages 1-39, May.
    9. Rudolf Kubík, 2015. "What is the Real Effect of Schooling on Economic Growth?," Prague Economic Papers, University of Economics, Prague, vol. 2015(2), pages 125-135.
    10. Eric A. Hanushek, 2005. "The Economics of School Quality," German Economic Review, Verein für Socialpolitik, vol. 6(3), pages 269-286, August.
    11. Sawami Matsushita & Abu Siddique & Margaret Giles, 2006. "Education and Economic Growth: A Case Study of Australia," Economics Discussion / Working Papers 06-15, The University of Western Australia, Department of Economics.
    12. A. Bergeaud & G. Cette & R. Lecat, 2016. "The role of production factor quality and technology diffusion in 20th century productivity growth," Working papers 588, Banque de France.

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