Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?

Abstract

We construct a revised version of the Barro and Lee (1996) data set for a sample of OECD countries using previously unexploited sources and following a heuristic approach to obtain plausible time profiles for attainment levels by removing sharp breaks in the data that seem to reflect changes in classification criteria. It is then shown that these revised data perform much better than the Barro and Lee (1996) or Nehru et al (1995) series in a number of growth specifications. We interpret these results as an indication that poor data quality may be behind counterintuitive findings in the recent literature on the (lack of) relationship between educational investment and growth. Using our preferred empirical specificaction, we also show that the contribution of TFP to cross-country productivity differentials is substantial and that its importance relative to differences in factor stocks increases over time. ______________________* We gratefully acknowledge financial support from the European Fund for Regional Development, the Spanish Ministry of Education through CICYT grants SEC99-1189 and SEC99-0820 and the European TNR "Specialization vs. diversification: the microeconomics of regional development and the propagation of macroeconomic shocks in Europe." We thank José Emilio Boscá, Anna Borkowsky (Swiss Federal Statistical Office) and Gunilla Dahlen (Statistics Sweden) for their helpful comments and suggestions, and María Jesús Freire and Juan Antonio Duro for their helpful research assistance.

Sola schola et sanitate: human capital as the root cause and priority for international development?

“…But, at the macroeconomic level, empirical evidence relating changes in education measures to economic growth has so far been ambiguous. Many authors suggest that this may be due to problems with the global empirical data on human capital (Benhabib & Spiegel 1994;Barro & Lee 1996;Pritchett 2001;de la Fuente & Doménech 2006;Cohen & Soto 2007). In a new major study recently published in Science, Lutz et al (2008) provide for the first time the unambiguous statistical evidence (based on econometric models) that education is a consistently significant determinant of a country's aggregate level of economic growth.…”

The effect of quantity and quality of education on innovation

“…Así, de acuerdo a Wößmann (2003), pueden darse dos tipos de errores en la medición de la variable: los errores provocados por Intangible Capital -http://dx.doi.org/10.3926/ic.345 -428 -el uso de proxies inadecuadas -ya que la mayoría de trabajos las eligen por la disponibilidad de datos existentes y no por su idoneidad-y los errores de medición propiamente dichos. En opinión de autores como Krueger y Lindahl (2001), De la Fuente y Doménech (2006) o Cohen y Soto (2007), estas limitaciones existentes en la medición del capital humano, especialmente en el contexto internacional, serían la causa de que la literatura empírica ofrezca resultados tan dispares en torno a la importancia del mismo. Por tanto, el cálculo del stock de capital humano se revela como fundamental a la hora de evaluar la verdadera importancia de dicho factor, existiendo un intenso debate sobre la forma de medición más apropiada de este.…”

Applying an Evolutionary Growth Theory for Sustainable Economic Development: The Effect of International Students as Tourists

“…The literature stresses the importance of social capital, which should be incorporated into development theories along with policy implications that encompass the micro and macro actors' effect on economic growth [44] (p. 154). As human capital correlates with human development, both significantly affect the economic growth of a country [45], and it has been a critical variable in developmental economics [31,[46][47][48][49]. Human capital, achieved using education, has also been highlighted as a crucial factor of economic development by several authors who assert the importance of human capital within the growth concept [47].…”