IDEAS home Printed from
   My bibliography  Save this paper

Education and productivity in developing countries : an aggregate production function approach


  • Lau, Lawrence J.
  • Jamison, Dean T.
  • Louat, Frederic F.


The estimated rates of return to education are typically (often considerably) above 10 percent a year in real terms - a respectable rate of return. The rates of return are highest for primary education, and higher in countries where educated manpower is scarcer, and the durability of educational capital can be as high as 50 years. The effect of education on real output has not been well documented. The authors have pooled data on 58 developing countries, from 1960 through 1986, to estimate an aggregate production function using as independent variables the quantities of capital, labor, land, average educational attainment of the labor force, and chronological time. They measured the percentage change in a region's real GDP in response to an increase of one year in the average educational attainment of the working age population in 1985. The estimated effects range from negative to more than 5 percent a year. The results suggest : a) a positive relationship between the level of primary schooling achieved and the size of its effect; b) a threshold of four years of schooling before primary school has an effect; and c) the effect of secondary education seems to be independent of the level of secondary schooling attained, although local factors may predominate here. The authors conclude that education is an important determinant of aggregate real output and productivity but that its effect varies considerably across countries and regions.

Suggested Citation

  • Lau, Lawrence J. & Jamison, Dean T. & Louat, Frederic F., 1991. "Education and productivity in developing countries : an aggregate production function approach," Policy Research Working Paper Series 612, The World Bank.
  • Handle: RePEc:wbk:wbrwps:612

    Download full text from publisher

    File URL:
    Download Restriction: no


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:612. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.