Human capital and economic growth revisited: A dynamic panel data study

This paper examines the role of human capital on economic growth by using a large panel of data including 93 countries. Given the cross-sectional character in most of the relevant studies, there is a possibility that when the long-run dynamics are considered, education might not be a significant determinant of growth. Following a dynamic panel data approach, the analysis indicates that education has, indeed, a significant and positive long-run effect on economic growth. Moreover, the size of this effect is stronger as the level of education (primary, secondary, and tertiary) increases. This has a straightforward policy implication that governments taking actions towards an expansion of their higher education may well expect larger gains in terms of higher economic growth in their countries. This is a revised version of a paper presented at the Fifty-first International Atlantic Economic Conference, Athens, Greece, March 13–20, 2001, and also at the conference on Post-Euro Era at the University of Ioannina, Greece, January 27–28, 2000. The authors would like to thank participants in both conferences and, in particular, Nick Apergis for his comments and useful suggestions on earlier drafts. The authors remain responsible for any shortcomings of the paper.     

AIDS and economic growth: A human capital approach

Using a model that combines growth and health capital equations this study analyses the impact of HIV/AIDS on economic growth. The econometric results indicate that the epidemic's effects have been substantial; in Africa the marginal impact on income per capita of a 1% increase in HIV prevalence rate is minus 0.59%. Even in countries with lower HIV prevalence rates the marginal impacts are non-trivial. Hence while the human and social costs of the HIV/AIDS epidemic are major causes for concern, these results indicate that the macroeconomic affects of the HIV/AIDS epidemic are important.     

Endogenous mortality, human capital and economic growth

We consider growth and welfare effects of lifetime-uncertainty in an economy with human capital-led endogenous growth. We argue that lifetime uncertainty reduces private incentives to invest in both physical and human capital. Using an overlapping generations framework with finite-lived households we analyze the relevance of government expenditure on health and education to counter such growth-reducing forces. We focus on three different models that differ with respect to the mode of financing of education: (i) both private and public spending, (ii) only public spending, and (iii) only private spending. Results show that models (i) and (iii) outperform model (ii) with respect to long-term growth rates of per capita income, welfare levels and other important macroeconomic indicators. Theoretical predictions of model rankings for these macroeconomic indicators are also supported by observed stylized facts.     

Tax avoidance,human capital accumulation and economic growth

Human capital accumulation may negatively affect economic growth by increasing tax avoidance and reducing effective tax rates and productive public investment. This paper analyzes how the endogenous feedback between human capital accumulation and tax avoidance affects economic growth and macroeconomic dynamics. Our findings show that this interaction produces remarkable growth and welfare effects.     

Population and economic growth with human and physical capital investments

We present a two-sector endogenous growth model with human and physical capital accumulation to analyze the long-run relationship between population growth and real per capita income growth. Formal education and investment in physical capital are assumed to be two separate components of human capital production. Along the balanced growth path equilibrium, population change may have a positive, negative, or else neutral effect on economic growth depending on whether physical and human capital are complementary/substitutes for each other in the formation of new human capital and on their degree of complementarity.

The human capital and economic growth nexus: in East and South Asia

This study adopts a disaggregated regional focus to test for the human capital (HC)-growth nexus in selected nine Asian countries. It utilizes the Empirical Bayesian methodology which addresses not only the heterogeneity issue but it also utilizes the common structural priors of regional countries to yield ‘informationally’ efficient estimates of the impact of HC on the stock and levels of GDP. Various measures of HC are utilized to determine which of these produces a better explanation of economic growth in the two Asian regions. The study finds that primary and secondary education was more prominent in explaining the fluctuations of economic growth in East Asia, whereas tertiary and vocational education showed positive effects on economic growth in South Asia. Government expenditures on education were also found to positively affect economic growth in both regions. The results shed new evidence to establish that the differences in growth rates within East and South Asia are associated with differences in educational progression in the regions.     

Adjustment time and economic growth revisited

Since the theory of the adjustment time in a neoclassical growth model was first published close to two decades ago [Sato Sato, February 1963, Sato, June 1964], there have appeared a number of interesting articles dealing with different aspects of adjustment time and economic growth. The purpose of this note is to verify the original conclusions in the framework of variable elasticity of substitutions (VES) production functions. All of the other assumptions are preserved. The results indicate that the original assertion concerning the length of time needed for 90 percent of the adjustment applies to a non-Cobb-Douglas production function as well. “Vicinity” (90%) of the new equilibrium can be reached only after a sufficiently long period of time—approximately 100 years on the average. Furthermore, the pattern of adjustment for this model is very similar to that of the original model.     

The quality of human capital,educational reform and economic growth

Using a general equilibrium growth model with a costly schooling process, this paper analyses the effect on economic growth of educational reform that allocates more resources to the schooling sector to raise the quality of human capital. It shows that the positive effect of improved quality on the economic growth could be offset by the reverse effect of reduced human capital formation that arises from the distortion of resource reallocation. An appropriate tax-subsidy scheme is shown to remove this reverse effect of educational reform.     

人力资本结构对经济增长贡献率的实证分析

建立人力资本结构对经济增长贡献率的计量模型,采用相关数据对该模型进行实证分析。结果表明：中等教育对我国经济增长的贡献率较高,高等教育相对较小。因此,建立模型分析不同受教育年限的人力资本对经济增长的贡献率就非常具有现实意义。     

Private versus social returns to human capital: Education and economic growth in India

This paper investigates whether differences between private and social returns to education of government sector employees can contribute to an explanation of the “micro–macro paradox” in the literature on education and growth. We hypothesize that in India educated people find privately rewarding jobs in a sector in which social returns are low, namely the government sector. This could help explain high returns to education at the micro level and small or negative coefficients on education growth in growth regressions at the macro level. The empirical results, which are consistent with this hypothesis, are based on an analysis of state-level data from India spanning 40 years.     

Heterogeneous capital, economic growth, and economic development

This paper asks how much does physical capital contribute to economic growth. It postulates that capital is heterogeneous because of embodied progress, and it structures the inquiry to account for differences in economic development. Embedded in data that cover 120 nations over 41 years are 35 derived capital stock series, whose characteristics include average ages stratified by development state. Growth accountancy proceeds by regression analysis cast in a production function context and repeated for each capital type. Those results help to establish the growth contributions of labor quantity and quality and capital quantity and quality. They also bear on neoclassical convergence.     

Social capital, innovation and growth: Evidence from Europe

This paper investigates the interplay between social capital, innovation and per capita income growth in the European Union. We model and identify innovation as an important mechanism that transforms social capital into higher income levels. In an empirical investigation of 102 European regions in the period 1990-2002, we show that higher innovation performance is conducive to per capita income growth and that social capital affects this growth indirectly by fostering innovation. Our estimates suggest that there is no direct role for social capital to foster per capita income growth in our sample of European Union countries.     

The interactive effects of human capital and quality of life on economic growth

To bridge the gap in the quality of life (QOL) and economic growth literature and understand the reinforcing effects of QOL and human capital on economic development, we examine the interactive effects of these two factors on wage growth from 2000 to 2007 at the county level across the United States. First, a Rosen–Roback model is employed to estimate implicit values of amenities including climate, clean air and other natural attributes, which are used to generate QOL indices. Second, QOL, human capital represented by the share of college graduates, and their interaction serve as key variables in the wage growth model. An instrumental variable approach and location fixed effects are used to address endogeneity of human capital and control for location-specific unobservable characteristics. Results suggest that human capital and QOL significantly contribute to economic growth and the growth effects are even larger in nonmetropolitan counties. Importantly, we find that the effect of human capital on growth is larger in high-QOL counties and QOL enhances the effect of human capital on growth. Our results provide empirical support for community development strategies through providing utility-enhancing amenities that improve QOL and retain human capital.     

The long-run impact of human capital on innovation and economic development in the regions of Europe

ABSTRACT

Human capital is supposed to be an important factor for innovation and economic development. However, the long-run impact of human capital on current innovation and economic development is still a black box, in particular at the regional level. Therefore, this paper makes the link between the past and the present. Using a large new dataset on regional human capital and other factors in the 19^th and 20^th century, we find that past regional human capital is a key factor explaining current regional disparities in innovation and economic development.     

Economic complexity,human capital and economic growth: empirical research based on cross-country panel data

Economic complexity reflects a country’s production capabilities and plays an important role in economic growth. This article measures the economic complexity of 210 countries using the method of reflections, and investigates the impact of economic complexity and human capital on economic growth. The measurement results show that there are significant differences regarding the level of complexity among countries. High-income economies have higher complexity than low- and middle-income economies. The empirical findings demonstrate that economic complexity and different levels of human capital have positive effects on long- and short-term growth. A positive interaction effect on economic growth exists between economic complexity and human capital. In addition, secondary education as a proxy for human capital has a relatively greater positive direct effect and a much stronger interactive effect with complexity on economic growth. In addition, the magnitude of the interaction effect between economic complexity and human capital on long- and short-term growth increases as the revealed comparative advantage threshold grows.     

Human capital and economic growth in Spanish regions

Modern economic growth theory has emphasized on the human capital effects on economic growth. In this case, the externalities from a better education could enhance economic growth process and facilitate the progress in different regional areas. The main objective of this paper is to analyze the effects of human capital on economic growth process by taking into account the case of Spanish regions. The authors examine whether a better education process and social capital can improve the economic growth process in such area and if it can explain the differences in per capita GDP existing in those regions. The paper uses data from Spanish Statistical Institute and from different institutes of the European Union. The Castilla La Mancha Regional Government has provided financial support for the Project PDI-02-025.     

Human capital and the time-profile of human fertility revisited

This paper examines a model of the intertemporal distribution of births recently proposed by Cigno that concludes 1) the optimal time profile will satisfy the Hotelling rule of natural resources depletion, and 2) women with high initial endowments of human capital will have all their children early in married life while those with low initial endowments will spread childbearing more evenly over the fertile period. This paper argues that Cigno's model is inconsistent with the empirical evidence. Specifically, it is claimed that: 1) the natural resource analogy has been misapplied; 2) the stated 1st order conditions are incorrect; 3) optimal birth profiles do not satsify the Hotelling rule; and 4) the optimal time profile is for all women, regardless of their human capital, to concentrate births at the end of the fertile period. Since the discounted opportunity cost of a birth declines over time, it always pays to postpone a birth as long as possible. However, again, the theoretical prediction of delayed childbirth is not consistent with available evidence, suggesting that important factors have been omitted from this model.     

Human capital and economic growth: A macroeconomic model for Pakistan

The paper presents a small macro model for Pakistan economy focusing the impact of investment in human capital on the key macroeconomic variables. The demand side is modeled along the Keynesian lines while the supply side is modeled as per neoclassical theory of production. This framework allows analyzing the effects of investment in human capital on supply side variables (like labor, physical and human capital) and demand side variables (like consumption and investment) at the same time.The model has small forecasting horizon in which three alternative scenarios regarding government spending on education are evaluated from 2012 to 2016. The model shows that the link between human capital and labor market is weak however a change in education spending affects output through enhancing productivity and through multiplier-accelerator principle. Though the model is small in size and forecasting horizon, it can help in evaluating the future paths of key macroeconomic variables associated with education spending.     

A multi-region model of economic growth with human capital and negative externalities in innovation

We use a multi-region model and provide the first theoretical analysis of the effects of human capital use and a particular kind of innovative activity on economic growth. In each of the N heterogeneous regions in our model, consumers have constant relative risk aversion preferences, there are negative externalities in innovation, and there are three kinds of manufacturing activities involving the production of blueprints for inputs or machines, the inputs or machines themselves, and a single final good for consumption. Our analysis generates four salient findings. First, for each of the N regions, we define a balanced growth path equilibrium, we characterize the market clearing factor prices, and we determine the free entry condition in the R&D sector. Second, we show that without growth in human capital, there is no sustained economic growth in any of the N regions. Third, we show that human capital growth generates sustained economic growth in each of the N regions. Finally, when discussing the above three findings, we shed light on the spatial dimensions of economic growth in our multi-region aggregate economy.