Does Education Cause Economic Growth?
E. Podrecca, G. Carmeci
Joanna Rymaszewska
Seidu Issah
Development Economics
Warsaw University13 November 2007
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Steps Economic growth models
Where is education?
What is the connection between education and economic growth?
Discussion
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Growth theoriesSolow Growth Model
Exogenous approach
Neoclassical/Endogenous Growth Model
Endogenous approach
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Education fires up technological progress
Ideas, knowledge and skills– ability to use more advanced capital goodsR&D spillovers, FDIs, international trade
Where is education?
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Education contd...Technological change accounts for differences in the rate of economic growth & income differences across countries Technological change; innovation and imitation requires human capital as an inputFormal education is an important source of human capital
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Granger causalityWhich do you think came first? The question has baffled scientists through the ages.
... be it chicken-egg-chicken-egg ...
Growth
Educational stock
Educational
investment
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Growth and human capital...
Human capital stimulates productivity growth directly or indirectly
...growthInvestmentHuman capital as a vehicle for technical progress
...levelsQuality of human capital
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Capitals and growth
Physical capital
investment
Investment in
educationG-cause
Physical capital
formation
Educational levels (stocks)
Physical capital + Human capital =
Growth
There is no Granger causality in both ways!
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The model.. VARiationsDataset: 86 DCs and LDCs
GMMvar1st, 2nd ord order autocorrelation3– period-lag instrumental variable
Ommited variable problem
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DiscussionEducation Human CapitalTFP
Quality of eductional systemWork experience and on the job trainingHealth of the labour force
EFA – Education for All:2015’ UNESCO
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Under what conditions does education boost economic growth?
Conducive environmentTeachers – students relationshipsInfrastructureRelevance
Does education at all levels cause growth?
Discussion contd.
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Further readings...Marta Simões, (2006); How does education affect economic growth? An empirical investigation. GEMF – Grupo de Estudos Monetários e Financeiros Faculdade de Economia da Universidade de Coimbra; Av. Dias da Silva 165.
Charles I. Jones, (2002); Introduction to Economic Growth. 2nd Edition.
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Education is harder to steal (and therefore also to tax) than physical wealth...
"If a man empties his purse into his head, no one can take it from him.„
~Brian’s Education Blog
Thank you