Does Human Capital Matter for Growth in OECD Countries? Evidence from Pooled Mean-Group Estimates

30 Pages Posted: 18 Apr 2001

See all articles by Andrea Bassanini

Andrea Bassanini

Organization for Economic Co-Operation and Development (OECD); IZA Institute of Labor Economics

Stefano Scarpetta

OECD, Directorate for Employment, Labour and Social Affairs; IZA Institute of Labor Economics

Date Written: January 2001

Abstract

This paper presents empirical estimates of human-capital augmented growth equations for a panel of 21 OECD countries over the period 1971-98. It uses an improved dataset on human capital and a novel econometric technique that reconciles growth model assumptions with the needs of panel data regressions. Unlike several previous studies, our results point to a positive and significant impact of human capital accumulation to output per capita growth. The estimated long-run effect on output of one additional year of education (about 6 percent) is also consistent with microeconomic evidence on the private returns to schooling. We also found a significant growth effect from the accumulation of physical capital and a speed of convergence to the steady state of around 15 percent per year. Taken together these results are not consistent with the human capital augmented version of the Solow model, but rather they support an endogenous growth model a la Uzawa-Lucas, with constant returns to scale to "broad" (human and physical) capital.

Keywords: growth, human capital, panel data

JEL Classification: O11, O15, O41

Suggested Citation

Bassanini, Andrea and Scarpetta, Stefano, Does Human Capital Matter for Growth in OECD Countries? Evidence from Pooled Mean-Group Estimates (January 2001). Available at SSRN: https://ssrn.com/abstract=265364 or http://dx.doi.org/10.2139/ssrn.265364

Andrea Bassanini

Organization for Economic Co-Operation and Development (OECD) ( email )

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IZA Institute of Labor Economics ( email )

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Stefano Scarpetta (Contact Author)

OECD, Directorate for Employment, Labour and Social Affairs ( email )

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Paris Cedex 16, 75016
France
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+33 1 45 24 18 59 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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