Education and productivity growth in a market economy

The purpose of this paper is to measure the impact of investment in education on U.S. economic growth. Education is treated as an investment in human capital, since benefits accrue to an educated individual over a lifetime of activities. One of the most important benefits is higher income from participation in the labor market. This is the key to understanding the link between investment in education and economic growth. The most important finding is that investment in human and nonhuman capital accounts for an overwhelming proportion of the growth of the U.S. economy during the postwar period. Educational investment will continue to predominate in the investment requirements for more rapid growth.Invited Address at the Thirty-Fourth Atlantic Economic Society Conference, October 15–18, 1992, Plymouth, Massachusetts.