Arising from the questions "Would all types of human capital affect economic growth identically? And which type of schooling-primary, secondary, or tertiary-should public policy promote?", this study examines the nexus between different educational levels and Indonesia's economic growth over a reference period 1984-2014. During this period, education expansion took place at all three levels of education reflecting structural changes tied within the policies under the Millennium Development Goals (MDG's) as the key and powerful factor for sustainable economic development. The study applies the augmented Lucas endogenous growth model and employs the autoregressive distributed lag model. The empirical analysis reveals a long-run relation between education and economic growth. The estimated long-run and short-run elasticity of different education levels reveal that, overall, human capital structure in Indonesia is still at the stage of promoting economic growth and identifies tertiary education as the main level for development. The findings reveal that education level matters to economic growth. Further, the empirical evidence helps shed light on why empirical studies have failed to find a significant relationship between schooling and economic growth.

The most outstanding event in recent history has been the continuous increase in the proportion of students entering higher education. Thus, it seems reasonable to assume to what extent this significant increase in higher education participation has a connection to the individual characteristics, social-economic, religion, gender ethnicity geography variables. Using data from the IFLS, a binomial logit model was fitted to determine the factors that influence an individual to pursue a higher-level education as observed by the recent rise in the demand for higher education in Indonesia. The empirical findings of the study indicate the following: firstly, individual characteristic; score, school type are relevant variables for individual participation in higher education. Secondly, for the socioeconomic variables; income, father’s education, mother’s education, household status, household size are important variables for individual participation in higher education. Finally, for the gender, ethnicity variables; the results were quite shocking, both Javanese and Male are the less likely to demand higher education in Indonesia. Further, regional and geographic variables were found to be insignificant.