The Relationship between Human Capital and Economic Growth in Ireland

12 Pages Posted: 21 Nov 2016

Date Written: November 19, 2016

Abstract

This paper examined the causal relationship between human capital, capital stock, output and economic growth in Ireland in the period 1980-2012. This is the first test of causality between the factors in this time period for Ireland, and cointegration and error-correction modelling was used to test the relationships. Results show that GDP, capital stock and human capital are cointegrated. There is evidence of bi-directional causality from GDP to capital stock, bi-directional causality from capital stock to human capital, and uni-directional causality from GDP to human capital, but not vice versa. The human capital-led hypothesis, that GDP is caused by human capital, is not supported.

Keywords: Human Capital, Economic Growth, Education, Capital Stock

JEL Classification: I25, J24

Suggested Citation

McGrath, Patricia, The Relationship between Human Capital and Economic Growth in Ireland (November 19, 2016). Available at SSRN: https://ssrn.com/abstract=2872739 or http://dx.doi.org/10.2139/ssrn.2872739

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