Various hypotheses have been put forward in recent years concerning the contribution of human capital to economic growth. This paper argues that school enrolment rates--by far the most commonly used human capital measure in growth regressions attempting to test these hypotheses--conflate human capital stock and accumulation effects and lead to misinterpretations of the role of labour force growth. An alternative education-related human capital measure is constructed which is capable of distinguishing between stocks and flows. Applying this measure to samples of developed and less developed countries during the 1960-85 period suggests not only that there are important growth effects associated both with initial stocks of, and subsequent growth in, human capital, but also that this new measure out-performs the simple school enrolment rates used in previous analyses.
Using pooled cross-section/time-series data on 113 countries, we investigate empirical regularities in post-war economic growth. We find that coefficient values vary widely across identifiable groups of countries, with evidence supporting the convergence hypothesis apparent only in the OECD country sample. Among other results, we find that the growth of government consumption is significantly negatively correlated with the economic growth in three of four subsamples, including the OECD, and that political repression is negatively correlated with growth in Africa and Central and South America.
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In an insightful and influential paper, Mankiw et al. (1992, Quarterly Journal of Economics 107, 407–437) have suggested that an augmented Solow growth model can account for 80% of the variation in output per capita across countries due to different steady-state growth paths that result from differences in saving rates, education, and population growth. This paper carries their analysis one step further and asks whether changes in the growth rate between the 1960s and the 1980s can also be explained by this framework. Our results provide further support for several of Mankiw et al.'s key conclusions – investment in physical capital, population growth, and the initial levels of output seem to matter a great deal. However, investment in human capital has no ability to account for changes in growth rates over time. We conclude that investment in physical capital seems to be quite important for economic growth, though the reasons for this importance may not be fully captured by the augmented Solow growth model.
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