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Education for Growth in Sweden and the World


  • Alan B. Krueger

    (Princeton University and NBER)

  • Mikael Lindahl

    (Stockholm University)


This paper tries to reconcile evidence on the effect of schooling on income and on GDP growth from the microeconometric and empirical macro growth literatures. Much microeconometric evidence suggests that education is an important causal determinant of income for individuals within countries as diverse as Sweden and the United States. At a national level, however, recent studies have found that increases in educational attainment are unrelated to economic growth. This finding is shown to be a spurious result of the extremely high rate of measurement error in first-differenced cross-country education data. After accounting for measurement error, the effect of changes in educational attainment on income growth in cross-country data is at least as great as microeconometric estimates of the rate of return to years of schooling. We also investigate another finding of the macro growth literature -- that economic growth depends positively on the initial stock of human capital. We find that the effect of the initial level of education on growth is sensitive to the econometric assumptions that are imposed on the data (e.g., constant-coefficient assumption), as well as to the other covariates included in the model. Perhaps most importantly, we find that the initial level of education does not appear to have a significant effect on economic growth among OECD countries. The conclusion comments on policy implications for Sweden based on the human capital literature.

Suggested Citation

  • Alan B. Krueger & Mikael Lindahl, 1998. "Education for Growth in Sweden and the World," Working Papers 790, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:411

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    Cited by:

    1. Jesús López-Rodríguez & J. Andrés Faíña, "undated". "Human Capital Accumulation and Geography: Empirical Evidence in the European Union," Regional and Urban Modeling 283600060, EcoMod.
    2. Chapman, Bruce, 2006. "Income Contingent Loans for Higher Education: International Reforms," Handbook of the Economics of Education, Elsevier.
    3. Mikaela Backman & Lina Bjerke, 2014. "Returns to higher education: a regional perspective," Chapters,in: Knowledge, Innovation and Space, chapter 10, pages 237-264 Edward Elgar Publishing.
    4. Raghbendra Jha & Bagala Biswal & Urvashi D. Biswal, 2001. "An Empirical Analysis of the Impact of Public Expenditures on Education and Health on Poverty in Indian States," ASARC Working Papers 2001-05, The Australian National University, Australia South Asia Research Centre.
    5. Jim Davies, "undated". "Empirical Evidence on Human Capital Externalities," Working Papers-Department of Finance Canada 2003-11, Department of Finance Canada.
    6. Stepan Jurajda & Janet Mitchell, 2001. "Markets and Growth," William Davidson Institute Working Papers Series 382, William Davidson Institute at the University of Michigan.
    7. Asplund, Rita, 2004. "A Macroeconomic Perspective on Education and Inequality," Discussion Papers 906, The Research Institute of the Finnish Economy.
    8. Kevin Denny & Colm Harmon & Vincent O'Sullivan, 2003. "Functional literacy, educational attainment and earnings : a multi-country comparison," Working Papers 200319, School of Economics, University College Dublin.
    9. Arnaud Chevalier & Kevin Denny & Dorren McMahon, 2003. "A multi-country study of inter-generational educational mobility," Working Papers 200314, School of Economics, University College Dublin.
    10. Marcelo Eduardo A. da Silva & Alexandre Rands Barros, 2003. "Further Evidence on Wage and Productivity Differentials in Brazil," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] f37, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. William Easterly & Ross Levine, 2002. "It´s Not Factor Accumulation: Stylized Facts and Growth Models," Central Banking, Analysis, and Economic Policies Book Series,in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 3, pages 061-114 Central Bank of Chile.
    12. Papageorgiou Chris & Pérez-Sebastián Fidel, 2005. "Matching Up the Data on Education with Economic Growth Models," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-22, April.
    13. Brauninger, Michael & Pannenberg, Markus, 2002. "Unemployment and productivity growth: an empirical analysis within an augmented Solow model," Economic Modelling, Elsevier, vol. 19(1), pages 105-120, January.
    14. Giménez, Gregorio, 2005. "The human capital endowment of Latin America and the Caribbean," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    15. repec:ucn:wpaper:10197/1105 is not listed on IDEAS
    16. Neri, F., 2001. "Schooling Quality and Economic Growth," Economics Working Papers wp01-06, School of Economics, University of Wollongong, NSW, Australia.
    17. Daniel F. Heuermann, 2009. "Career Networks and Job Matching - Evidence on the Microeconomic Foundations of Human Capital Externalities," IAAEG Discussion Papers until 2011 200901, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    18. Kevin Denny & Harmon, Harmon & Sandra Redmond, 2000. "Functional literacy, educational attainment and earnings - evidence from the international adult literacy survey," IFS Working Papers W00/09, Institute for Fiscal Studies.
    19. James D. Wolfensohn & Nicholas Stern & Ian Goldin & Halsey Rogers & Mats Karlsson, 2002. "A Case for Aid : Building a Consensus for Development Assistance," World Bank Publications, The World Bank, number 14260.
    20. Kaoru Nabeshima, 2003. "Raising the quality of secondary education in East Asia," Policy Research Working Paper Series 3140, The World Bank.
    21. Maliranta, Mika, 2002. "From R&D to Productivity Through Micro-Level Restructuring," Discussion Papers 795, The Research Institute of the Finnish Economy.

    More about this item


    education; growth; Sweden;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education


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