The Relationship between Human Capital and Economic Growth in Ireland
12 Pages Posted: 21 Nov 2016
Date Written: November 19, 2016
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
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